Dec. 15, 2005 CODE OF FEDERAL REGULATIONS 7 Parts 700 to 899 Revised as of January 1, 2006 Agriculture Containing a codification of documents of general applicability and future effect As of January 1, 2006 With Ancillaries

Published by:

Office of the Federal Register

National Archives and Records

Administration

 A Special Edition of the Federal Register U.S. GOVERNMENT OFFICIAL EDITION NOTICE Legal Status and Use of Seals and Logos e:\seals\archives.ai

The seal of the National Archives and Records Administration (NARA) authenticates the Code of Federal Regulations (CFR) as the official codification of Federal regulations established under the Federal Register Act. Under the provisions of 44 U.S.C. 1507, the contents of the CFR, a special edition of the Federal Register, shall be judicially noticed. The CFR is prima facie evidence of the original documents published in the Federal Register (44 U.S.C. 1510).

It is prohibited to use NARA's official seal and the stylized Code of Federal Regulations logo on any republication of this material without the express, written permission of the Archivist of the United States or the Archivist's designee. Any person using NARA's official seals and logos in a manner inconsistent with the provisions of 36 CFR part 1200 is subject to the penalties specified in 18 U.S.C. 506, 701, and 1017.

Use of ISBN Prefix

This is the Official U.S. Government edition of this publication and is herein identified to certify its authenticity. Use of the 0-16 ISBN prefix is for U.S. Government Printing Office Official Editions only. The Superintendent of Documents of the U.S. Government Printing Office requests that any reprinted edition clearly be labeled as a copy of the authentic work with a new ISBN.

e:\seals\gpologo.eps

U . S . G O V E R N M E N T P R I N T I N G O F F I C E

U.S. Superintendent of Documents • Washington, DC 20402-0001

http://bookstore.gpo.gov

Phone: toll-free (866) 512-1800; DC area (202) 512-1800

 Table of Contents Page Explanation v Title 7: Subtitle B—Regulations of the Department of Agriculture (Continued) Chapter VII—Farm Service Agency, Department of Agriculture 5 Chapter VIII—Grain Inspection, Packers and Stockyard Administration (Federal Grain Inspection Service), Department of Agriculture 257 Finding Aids: Material Approved for Incorporation by Reference 411 Table of CFR Titles and Chapters 413 Alphabetical List of Agencies Appearing in the CFR 431 List of CFR Sections Affected 441

Cite this Code:CFR

To cite the regulations in this volume use title, part and section number. Thus, 7 CFR 700.1 refers to title 7, part 700, section 1. Explanation

The Code of Federal Regulations is a codification of the general and permanent rules published in the Federal Register by the Executive departments and agencies of the Federal Government. The Code is divided into 50 titles which represent broad areas subject to Federal regulation. Each title is divided into chapters which usually bear the name of the issuing agency. Each chapter is further subdivided into parts covering specific regulatory areas.

Each volume of the Code is revised at least once each calendar year and issued on a quarterly basis approximately as follows:

Title 1 through Title 16

as of January 1

Title 17 through Title 27

as of April 1

Title 28 through Title 41

as of July 1

Title 42 through Title 50

as of October 1

The appropriate revision date is printed on the cover of each volume.

LEGAL STATUS

The contents of the Federal Register are required to be judicially noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie evidence of the text of the original documents (44 U.S.C. 1510).

 HOW TO USE THE CODE OF FEDERAL REGULATIONS

The Code of Federal Regulations is kept up to date by the individual issues of the Federal Register. These two publications must be used together to determine the latest version of any given rule.

To determine whether a Code volume has been amended since its revision date (in this case, January 1, 2006), consult the “List of CFR Sections Affected (LSA),” which is issued monthly, and the “Cumulative List of Parts Affected,” which appears in the Reader Aids section of the daily Federal Register. These two lists will identify the Federal Register page number of the latest amendment of any given rule.

 EFFECTIVE AND EXPIRATION DATES

Each volume of the Code contains amendments published in the Federal Register since the last revision of that volume of the Code. Source citations for the regulations are referred to by volume number and page number of the Federal Register and date of publication. Publication dates and effective dates are usually not the same and care must be exercised by the user in determining the actual effective date. In instances where the effective date is beyond the cut-off date for the Code a note has been inserted to reflect the future effective date. In those instances where a regulation published in the Federal Register states a date certain for expiration, an appropriate note will be inserted following the text.

 OMB CONTROL NUMBERS

The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires Federal agencies to display an OMB control number with their information collection request. Many agencies have begun publishing numerous OMB control numbers as amendments to existing regulations in the CFR. These OMB numbers are placed as close as possible to the applicable recordkeeping or reporting requirements.

 OBSOLETE PROVISIONS

Provisions that become obsolete before the revision date stated on the cover of each volume are not carried. Code users may find the text of provisions in effect on a given date in the past by using the appropriate numerical list of sections affected. For the period before January 1, 2001, consult either the List of CFR Sections Affected, 1949-1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate volumes. For the period beginning January 1, 2001, a “List of CFR Sections Affected” is published at the end of each CFR volume.

 INCORPORATION BY REFERENCE

What is incorporation by reference? Incorporation by reference was established by statute and allows Federal agencies to meet the requirement to publish regulations in the Federal Register by referring to materials already published elsewhere. For an incorporation to be valid, the Director of the Federal Register must approve it. The legal effect of incorporation by reference is that the material is treated as if it were published in full in the Federal Register (5 U.S.C. 552(a)). This material, like any other properly issued regulation, has the force of law.

What is a proper incorporation by reference? The Director of the Federal Register will approve an incorporation by reference only when the requirements of 1 CFR part 51 are met. Some of the elements on which approval is based are:

(a) The incorporation will substantially reduce the volume of material published in the Federal Register.

(b) The matter incorporated is in fact available to the extent necessary to afford fairness and uniformity in the administrative process.

(c) The incorporating document is drafted and submitted for publication in accordance with 1 CFR part 51.

Properly approved incorporations by reference in this volume are listed in the Finding Aids at the end of this volume.

What if the material incorporated by reference cannot be found? If you have any problem locating or obtaining a copy of material listed in the Finding Aids of this volume as an approved incorporation by reference, please contact the agency that issued the regulation containing that incorporation. If, after contacting the agency, you find the material is not available, please notify the Director of the Federal Register, National Archives and Records Administration, Washington DC 20408, or call 202-741-6010.

 CFR INDEXES AND TABULAR GUIDES

A subject index to the Code of Federal Regulations is contained in a separate volume, revised annually as of January 1, entitled CFR Index and Finding Aids. This volume contains the Parallel Table of Statutory Authorities and Agency Rules (Table I). A list of CFR titles, chapters, and parts and an alphabetical list of agencies publishing in the CFR are also included in this volume.

An index to the text of “Title 3—The President” is carried within that volume.

The Federal Register Index is issued monthly in cumulative form. This index is based on a consolidation of the “Contents” entries in the daily Federal Register.

A List of CFR Sections Affected (LSA) is published monthly, keyed to the revision dates of the 50 CFR titles.

 REPUBLICATION OF MATERIAL

There are no restrictions on the republication of textual material appearing in the Code of Federal Regulations.

 INQUIRIES

For a legal interpretation or explanation of any regulation in this volume, contact the issuing agency. The issuing agency's name appears at the top of odd-numbered pages.

For inquiries concerning CFR reference assistance, call 202-741-6000 or write to the Director, Office of the Federal Register, National Archives and Records Administration, Washington, DC 20408 or e-mail fedreg.info@nara.gov.

 SALES

The Government Printing Office (GPO) processes all sales and distribution of the CFR. For payment by credit card, call toll-free, 866-512-1800 or DC area, 202-512-1800, M-F, 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2250, 24 hours a day. For payment by check, write to the Superintendent of Documents, Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO Customer Service call 202-512-1803.

 ELECTRONIC SERVICES

The full text of the Code of Federal Regulations, the LSA (List of CFR Sections Affected), The United States Government Manual, the Federal Register, Public Laws, Public Papers, Weekly Compilation of Presidential Documents and the Privacy Act Compilation are available in electronic format at www.gpoaccess.gov/nara (“GPO Access”). For more information, contact Electronic Information Dissemination Services, U.S. Government Printing Office. Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, gpoaccess@gpo.gov.

The Office of the Federal Register also offers a free service on the National Archives and Records Administration's (NARA) World Wide Web site for public law numbers, Federal Register finding aids, and related information. Connect to NARA's web site at www.archives.gov/federal_register. The NARA site also contains links to GPO Access.

 Raymond A. Mosley, Director, Office of the Federal Register. January 1, 2006. THIS TITLE

Title 7—Agriculture is composed of fifteen volumes. The parts in these volumes are arranged in the following order: parts 1-26, 27-52, 53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-1599, 1600-1899, 1900-1939, 1940-1949, 1950-1999, and part 2000 to end. The contents of these volumes represent all current regulations codified under this title of the CFR as of January 1, 2006.

The Food and Nutrition Service current regulations in the volume containing parts 210-299, include the Child Nutrition Programs and the Food Stamp Program. The regulations of the Federal Crop Insurance Corporation are found in the volume containing parts 400-699.

All marketing agreements and orders for fruits, vegetables and nuts appear in the one volume containing parts 900-999. All marketing agreements and orders for milk appear in the volume containing parts 1000-1199.

For this volume, Robert J. Sheehan was Chief Editor. The Code of Federal Regulations publication program is under the direction of Frances D. McDonald, assisted by Alomha S. Morris.

 <LRH>7 CFR Ch. VII (1-1-06 Edition)</LRH> <RRH>Farm Service Agency, USDA</RRH> <CFRTITLE> <TITLEHD> <PRTPAGE P="1"/> <HD SOURCE="HED">Title 7—Agriculture</HD> <P>(This book contains parts 700 to 899)</P> </TITLEHD> <CFRTOC> <SUBTI> <HD SOURCE="HED">SUBTITLE B—Regulations of the Department of Agriculture (Continued)</HD> </SUBTI> <PTHD>Part</PTHD> <CHAPTI> <SUBJECT> <E T="04">chapter vii</E>—Farm Service Agency, Department of Agriculture</SUBJECT> <PG>700</PG> </CHAPTI> <CHAPTI> <SUBJECT> <E T="04">chapter viii</E>—Grain Inspection, Packers and Stockyard Administration (Federal Grain Inspection Service), Department of Agriculture</SUBJECT> <PG>800</PG> </CHAPTI> </CFRTOC> </CFRTITLE> <SUBTITLE> <PRTPAGE P="3"/> <HD SOURCE="HED">Subtitle B—Regulations of the Department of Agriculture (Continued)</HD> <CHAPTER> <TOC> <TOCHD> <PRTPAGE P="5"/> <HD SOURCE="HED">CHAPTER VII—FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE</HD> </TOCHD> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>1. Nomenclature changes to chapter VII appear at 59 FR 60299, Nov. 23, 1994, as corrected at 59 FR 66438, Dec. 27, 1994, and at 60 FR 64297, Dec. 15, 1995.</P> </EDNOTE> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER A—AGRICULTURAL CONSERVATION PROGRAM</HD> </SUBCHAP> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>700</PT> <SUBJECT>Experimental Rural Clean Water Program</SUBJECT> <PG>7</PG> <PT>701</PT> <SUBJECT>Emergency Conservation Program and certain related programs previously administered under this part</SUBJECT> <PG>21</PG> <PT>702</PT> <SUBJECT>Colorado River Basin Salinity (CRSC) Control Program</SUBJECT> <PG>29</PG> <PT>707</PT> <SUBJECT>Payments due persons who have died, disappeared, or have been declared incompetent</SUBJECT> <PG>38</PG> <PT>708</PT> <SUBJECT>Record retention requirements—all programs</SUBJECT> <PG>41</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER B—FARM MARKETING QUOTAS, ACREAGE ALLOTMENTS, AND PRODUCTION ADJUSTMENT</HD> </SUBCHAP> <CHAPTI> <PT>711</PT> <SUBJECT>Marketing quota review regulations</SUBJECT> <PG>42</PG> <PT>714</PT> <SUBJECT>Refunds of penalties erroneously, illegally, or wrongfully collected</SUBJECT> <PG>51</PG> <PT>717</PT> <SUBJECT>Holding of referenda</SUBJECT> <PG>54</PG> <PT>718</PT> <SUBJECT>Provisions applicable to multiple programs</SUBJECT> <PG>67</PG> <PT>729</PT> <SUBJECT>Peanuts marketing quotas</SUBJECT> <PG>87</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER C—REGULATIONS FOR WAREHOUSES</HD> </SUBCHAP> <CHAPTI> <PT>735</PT> <SUBJECT>Regulations for the United States Warehouse Act</SUBJECT> <PG>88</PG> <PT>743</PT> <RESERVED>[Reserved]</RESERVED> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER D—SPECIAL PROGRAMS</HD> </SUBCHAP> <CHAPTI> <PT>750</PT> <SUBJECT>Soil Bank [Note]</SUBJECT> <PG>102</PG> <PT>752</PT> <SUBJECT>Water Bank Program</SUBJECT> <PG>102</PG> <PT>755</PT> <SUBJECT>Regional programs</SUBJECT> <PG>109</PG> <PT>760</PT> <SUBJECT>Indemnity payment programs</SUBJECT> <PG>117</PG> <PT>761</PT> <SUBJECT>General and administrative</SUBJECT> <PG>125</PG> <PT>762</PT> <SUBJECT>Guaranteed farm loans</SUBJECT> <PG>126</PG> <PT>764</PT> <SUBJECT>Emergency farm loans</SUBJECT> <PG>168<PRTPAGE P="6"/> </PG> <PT>770</PT> <SUBJECT>Indian tribal land aquisition loans</SUBJECT> <PG>179</PG> <PT>771</PT> <SUBJECT>Boll Weevil Era Dication Loan Program</SUBJECT> <PG>182</PG> <PT>772</PT> <SUBJECT>Servicing minor program loans</SUBJECT> <PG>186</PG> <PT>773</PT> <SUBJECT>Special Apple Loan Program</SUBJECT> <PG>191</PG> <PT>774</PT> <SUBJECT>Emergency Loan for Seed Producers Program</SUBJECT> <PG>195</PG> <PT>780</PT> <SUBJECT>Appeal regulations</SUBJECT> <PG>198</PG> <PT>781</PT> <SUBJECT>Disclosure of foreign investment in agricultural land</SUBJECT> <PG>205</PG> <PT>782</PT> <SUBJECT>End-Use Certificate Program</SUBJECT> <PG>211</PG> <PT>783</PT> <SUBJECT>Tree Assistance Program</SUBJECT> <PG>217</PG> <PT>784</PT> <SUBJECT>2004 ewe lamb replacement and retention payment program</SUBJECT> <PG>220</PG> <PT>785</PT> <SUBJECT>Certified state mediation program</SUBJECT> <PG>225</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER E—PROVISIONS COMMON TO MORE THAN ONE PROGRAM</HD> </SUBCHAP> <CHAPTI> <PT>792</PT> <SUBJECT>Debt settlement policies and procedures</SUBJECT> <PG>232</PG> <PT>795</PT> <SUBJECT>Payment limitation</SUBJECT> <PG>241</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER F—PUBLIC RECORDS</HD> </SUBCHAP> <CHAPTI> <PT>798</PT> <SUBJECT>Availability of information to the public</SUBJECT> <PG>248</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER G—ENVIRONMENTAL PROTECTION</HD> </SUBCHAP> <CHAPTI> <PT>799</PT> <SUBJECT>Environmental quality and related environmental concerns—compliance with the National Environmental Policy Act</SUBJECT> <PG>250</PG> </CHAPTI> </TOC> <SUBCHAP TYPE="N"> <PRTPAGE P="7"/> <HD SOURCE="HED">SUBCHAPTER A—AGRICULTURAL CONSERVATION PROGRAM</HD> <PART> <EAR>Pt. 700</EAR> <HD SOURCE="HED">PART 700—EXPERIMENTAL RURAL CLEAN WATER PROGRAM</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECHD>Sec.</SECHD> <SECTNO>700.1</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <SECTNO>700.2</SECTNO> <SUBJECT>Objective.</SUBJECT> <SECTNO>700.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>700.4</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>700.5</SECTNO> <SUBJECT>Responsibilities.</SUBJECT> <SECTNO>700.6</SECTNO> <SUBJECT>Officials not precluded from exercising authority.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Project Authorization and Funding</HD> <SECTNO>700.10</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>700.11</SECTNO> <SUBJECT>Availability of funds.</SUBJECT> <SECTNO>700.12</SECTNO> <SUBJECT>Eligible project areas.</SUBJECT> <SECTNO>700.13</SECTNO> <SUBJECT>Project applications.</SUBJECT> <SECTNO>700.14</SECTNO> <SUBJECT>Review and approval of project applications.</SUBJECT> <SECTNO>700.15</SECTNO> <SUBJECT>Transfer of funds.</SUBJECT> <SECTNO>700.16</SECTNO> <SUBJECT>Termination of project funding.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Participant's RCWP Contracts</HD> <SECTNO>700.20</SECTNO> <SUBJECT>Eligible land.</SUBJECT> <SECTNO>700.21</SECTNO> <SUBJECT>Eligible person (participant).</SUBJECT> <SECTNO>700.22</SECTNO> <SUBJECT>Application for assistance.</SUBJECT> <SECTNO>700.23</SECTNO> <SUBJECT>Water quality plan.</SUBJECT> <SECTNO>700.24</SECTNO> <SUBJECT>Cost-sharing.</SUBJECT> <SECTNO>700.25</SECTNO> <SUBJECT>RCWP contract.</SUBJECT> <SECTNO>700.26</SECTNO> <SUBJECT>Contract modifications.</SUBJECT> <SECTNO>700.27</SECTNO> <SUBJECT>Cost-share payment.</SUBJECT> <SECTNO>700.28</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>700.29</SECTNO> <SUBJECT>Contract violations.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Monitoring and Evaluation</HD> <SECTNO>700.40</SECTNO> <SUBJECT>General program monitoring and evaluation.</SUBJECT> <SECTNO>700.41</SECTNO> <SUBJECT>Comprehensive USDA/EPA joint project water, quality monitoring, evaluation and analysis.</SUBJECT> <SECTNO>700.42</SECTNO> <SUBJECT>Program evaluation.</SUBJECT> <SECTNO>700.43</SECTNO> <SUBJECT>Public benefits when installing BMP's.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 96-108, 93 Stat. 821, 835.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>45 FR 14009, Mar. 4, 1980, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECTION> <SECTNO>§ 700.1</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <P>(a) The purpose of this part is for the U.S. Department of Agriculture (USDA), with certain concurrences by the U.S. Environmental Protection Agency (EPA), to set forth regulations to carry out an experimental Rural Clean Water Program (RCWP) as authorized by the Agriculture, Rural Development and Related Agencies Appropriations Act, fiscal year 1980, Pub. L. 96-108 (hereinafter referred to as the “1980 Appropriations Act”) and subsequent appropriations.</P> <P>(b) The RCWP will provide financial and technical assistance to private land owners and operators (participants) having control of agricultural land. The assistance is provided through long-term contracts of 3 to 10 years to install best management practices (BMPs) in approved project areas which have critical water quality problems resulting from agricultural activities. The project area must reflect the water quality priority concerns developed through the established water quality management program process. Participation RCWP is voluntary.</P> <P>(c) This is a new USDA program using the experiences under various on-going USDA programs and the established water quality management program of EPA.</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.2</SECTNO> <SUBJECT>Objective.</SUBJECT> <P>The objectives of the RCWP are to:</P> <P>(a) Improve impaired water use and quality in the approved project area in the most cost-effective manner possible in keeping with the provision of adequate supplies of food, fiber, and a quality environment.</P> <P>(b) Assist agricultural land owners and operators to reduce agricultural nonpoint source water pollutants and to improve water quality in rural areas to meet water quality standards or water quality goals.</P> <P>(c) Develop and test programs, policies and procedures for the control of agricultural nonpoint source pollution.</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]</CITA> </SECTION> <SECTION> <PRTPAGE P="8"/> <SECTNO>§ 700.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>At the national level, the Secretary of Agriculture will administer the RCWP in consultation with the Administrator, EPA, including EPA's concurrence in the selection of the BMPs, as provided in the 1980 Appropriations Act and subsequent appropriations. Authority to approve projects is reserved to the Secretary. The Secretary of Agriculture hereby delegates responsibility for administration of the program to the Administrator, Farm Service Agency (FSA) and the coordination of technical assistance to the Chief, Soil Conservation Service (SCS). FSA will be assisted by other USDA agencies in accordance with existing authorities.</P> <P>(a) A National Rural Clean Water Coordinating Committee (NCC), chaired by the Administrator, FSA, will assist in carrying out the RCWP.</P> <P>(b) A State Rural Clean Water Coordinating Committee (SCC) will assist the State ASC Committee in administering the program. The State ASC Committee Chairperson will chair the SCC. Where two or more States are involved in a project area the Deputy Administrator, State and County Operations (DASCO), FSA, shall develop a coordinating process.</P> <P>(c) A Local Rural Clean Water Coordinating Committee (LCC) will be established to assure coordination at the project level. The LCC committee will be chaired by the County ASC Committee Chairperson and will assist the County ASC Committee as provided in these regulations and as otherwise developed by the SCC and the LCC. Where two or more counties are involved in a project area, the SCC shall develop a coordination process.</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981 59 FR 60299, Nov. 23, 1994]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.4</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) <E T="03">Adequate Level of Participation.</E> An adequate level of participation is reached when participants having control of 75 percent (unless a different level is approved by the Administrator, FSA, with the concurrence of the NCC), of the identified critical area(s) or source(s) of the agricultural nonpoint source pollution problem in the project area, are under contract.</P> <P>(b) <E T="03">Administrative Services.</E> The administration of the RCWP except for the technical phases as assigned in § 700.5 of these regulations.</P> <P>(c) <E T="03">Agricultural Land.</E> That portion(s) of a farm or ranch used to produce: Grains, row crops, seed crops, vegetables, hay, pasture, orchards, vineyards, trees, field grown ornamentals, livestock or other agricultural commodities.</P> <P>(d) <E T="03">Agricultural Nonpoint Source Pollution.</E> Pollution originating from diffuse sources, including, but not limited to, land areas and return flows from agricultural lands such as:</P> <P>(1) Animal waste areas and land used for livestock and/or crop production, or</P> <P>(2) Lands with silviculturally related pollution.</P> <P>(3) Concentrated animal feeding operations defined as point sources in 40 CFR 125.1 and 125.51, are not eligible for assistance under RCWP.</P> <P>(e) <E T="03">Applicant.</E> A person in an approved project area who applies for RCWP assistance.</P> <P>(f) <E T="03">Average Cost.</E> The calculated cost, determined by recent actual local costs and current cost estimates, considered necessary for carrying out BMPs or an identifiable unit thereof.</P> <P>(g) <E T="03">Best Management Practice (BMP).</E> A single practice or a system of practices to improve water quality included in the approved RCWP application that reduces or prevents agricultural nonpoint source pollution.</P> <P>(h) <E T="03">BMP Costs.</E> The amount of money actually paid or obligated to be paid by the participant for equipment use, materials and services for carrying out BMPs or an identifiable unit of a BMP. Loss of income from crops during the first twelve months following the conversion of productive cropland to permanent vegetative cover or trees may be considered a part of the BMP cost for a project where it is determined that harvesting or grazing restrictions are necessary in order to establish properly the practice and the reimbursement for loss of income is necessary to provide incentives to achieve an adequate level of participation as defined in 7 CFR 700.4(a). If the participant uses personal resources, the cost <PRTPAGE P="9"/>includes the computed value of personal labor, equipment use, and materials.</P> <P>(i) <E T="03">BMP Life Span.</E> Each BMP shall have a life span of not less than 5 years unless otherwise approved by the Administrator, FSA.</P> <P>(j) <E T="03">Conservation District (CD).</E> A subdivision of a State or territory organized pursuant to the State Soil Conservation District Law, as amended. In some States these are called soil conservation districts, soil and water conservation districts, resource conservation districts, or natural resource districts.</P> <P>(k) <E T="03">Contract.</E> The document that includes the water-quality plan and is executed by the participant and approved by the County ASC Committee. Such document evidences the agreement between parties for carrying out BMPs on the participant's land.</P> <P>(l) <E T="03">Contract Period.</E> That period of time, 3 to 10 years, established as necessary to implement the BMPs needed to solve the water quality problems in the contract.</P> <P>(m) <E T="03">Cost-Share Level.</E> That percentage of the total cost of installing a BMP which is to be borne by the government under the RCWP.</P> <P>(n) <E T="03">Cost Share Rate.</E> The amount of money per unit (cubic yard, acre, etc.) to be paid for carrying out BMPs under the RCWP.</P> <P>(o) <E T="03">County ASC Committee.</E> The County ASC Committee elected by the farmers/ranchers in the county as provided for under section 8(b) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)).</P> <P>(p) <E T="03">Critical Areas or Sources.</E> Those designated areas or sources of agricultural nonpoint source pollutants identified in the project area as having the most significant impact on the impaired use of the receiving waters.</P> <P>(q) <E T="03">Direct Costs.</E> The costs that can be specifically identified with the program.</P> <P>(r) <E T="03">Farmer/Rancher.</E> An owner and/or operator who has a vested interest in the operation of the farm or ranch.</P> <P>(s) <E T="03">Federal Funds Authorized.</E> The total amount of funds authorized to approved projects.</P> <P>(t) <E T="03">Fiscal Year.</E> The fiscal year beginning October 1 and ending September 30.</P> <P>(u) <E T="03">Identifiable Unit.</E> A part of a BMP that can be clearly identified as a separate component in carrying out BMPs in the water quality plan.</P> <P>(v) <E T="03">Implementation.</E> The act of carrying out or executing a water quality plan, including both installation and maintenance of BMPs.</P> <P>(w) <E T="03">Maximum Payment Limitation.</E> The total amount of RCWP payments which a participant may receive for the full contract period. The total amount of such payments shall not exceed $50,000.</P> <P>(x) <E T="03">Offsite Benefits.</E> Favorable effects of BMPs that occur away from the land of the participant receiving RCWP assistance and which accrue to the public.</P> <P>(y) <E T="03">Participant.</E> A land owner and/or operator who is an agricultural producer and applies for and receives assistance under RCWP.</P> <P>(z) <E T="03">Participant's Water Quality Plan.</E> The plan that identifies critical agricultural nonpoint sources of pollution, identifies water quality problems and schedules the application of BMPs which contribute to meeting the water quality objectives of the project.</P> <P>(aa) <E T="03">Plan of Work.</E> A written strategy for implementing the approved project, outlining the actions needed and to be taken by various USDA, State and local agencies and interested groups.</P> <P>(bb) <E T="03">Pooling Agreement.</E> An agreement between two or more participants or ranchers to pool their resources to treat a common critical area or source.</P> <P>(cc) <E T="03">Privately-Owned Rural Land.</E> Lands not owned by Federal, State, or local governments that include cropland, pastureland, forest land, rangeland, and other associated lands.</P> <P>(dd) <E T="03">Project Area.</E> The geographic determination included in the project application as agreed upon by the SCC and LCC, and approved by the Secretary, utilizing the water quality planning process which identifies agricultural nonpoint source water quality problems.</P> <P>(ee) <E T="03">Project Life Span.</E> The maximum total life span of a project shall be not greater than fifteen (15) years from the date RCWP funds are first made available for the project.<PRTPAGE P="10"/> </P> <P>(ff) <E T="03">RCWP Project.</E> The total system of BMPs, administrative support, institutional arrangements, cost-sharing, technical and community support that are authorized in a RCWP project application.</P> <P>(gg) <E T="03">Secretary.</E> The Secretary of the U.S. Department of Agriculture.</P> <P>(hh) <E T="03">Silvicultural.</E> The science and art of cultivating (growing and tending) forest crops based on the knowledge of forestry. Silviculture-related pollution is included as agriculture nonpoint source pollution in the RCWP.</P> <P>(ii) <E T="03">Standards and Specifications.</E> Requirements that establish the minimum acceptable quality level for planning, designing, installing, and maintaining BMPs.</P> <P>(jj) <E T="03">State ASC Committee (STC).</E> The State ASC Committee appointed by the Secretary in accordance with Section 8 b of the Soil Conservation and Domestic Allotment Act, as amended.</P> <P>(kk) <E T="03">Technical Assistance.</E> The preparation of the participant's water quality plan, the design, layout and implementation of BMPs to accomplish the purposes of the water quality plan, and water quality monitoring and evaluation.</P> <P>(ll) <E T="03">Water Quality Management Program.</E> A Federal-state-local program for addressing and solving point and non-point source pollution problems consistent with national clean water goals. The basic authority for this program is in section 208 of the Federal Water Pollution Control Act, as amended, (Pub. L. 92-500).</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.5</SECTNO> <SUBJECT>Responsibilities.</SUBJECT> <P>(a) <E T="03">The United States Department of Agriculture (USDA) shall:</E> </P> <P>(1) Administer the RCWP by entering into contracts with land owners and operators to install and maintain BMPs to control agricultural nonpoint source pollution for improved water quality and:</P> <P>(i) Consult with EPA in the selection of projects;</P> <P>(ii) Obtain concurrence from EPA in approval of BMPs; and</P> <P>(iii) Insure an adequate joint USDA/EPA monitoring and evaluation plan is carried out on selected projects.</P> <P>(2) Provide technical assistance and share the cost of carrying out BMPs as specified in the contracts.</P> <P>(3) Evaluate the overall effectiveness of the program in improving water quality.</P> <P>(b) <E T="03">The Environmental Protection Agency (EPA) will:</E> </P> <P>(1) Participate on the NCC, SCC and LCC.</P> <P>(2) Furnish information from the water quality management planning process which can assist in identifying areas with the most critical water quality problems for project applications.</P> <P>(3) Participate in the approval of project applications for funding.</P> <P>(4) Concur with the Secretary on BMPs recommended by the County and State ASC Committees and approved by the Secretary for funding, or recommended by the Secretary, with concurrence of the Administrator, EPA, and approved by the State and County ASC Committees.</P> <P>(5) Assist USDA in evaluating the effectiveness of the program in improving water quality, including concurrence on projects selected for comprehensive monitoring and evaluation and development of the criteria for the comprehensive, joint USDA/EPA water quality monitoring, evaluation, and analysis program.</P> <P>(c) <E T="03">The Farm Service Agency shall:</E> </P> <P>(1) Serve as chairperson of the NCC, SCC and LCC and be responsible for developing and administering the RCWP.</P> <P>(2) Provide to the Secretary those project applications recommended for approval, including the recommendations of the NCC.</P> <P>(3) Through County FSA Offices, provide the administrative support in all approved RCWP projects, such as accepting applications, preparing and approving contracts, carrying out funds control, issuing cost-share payments, otherwise administering contracts and payments, provide compliance oversight, maintain records and develop reports.</P> <P>(4) Enter into agreements with Federal, State and local agencies and others as needed for support to be provided in an approved RCWP project.<PRTPAGE P="11"/> </P> <P>(5) Through County and Community ASC Committees work with landowners and operators in the project area to encourage participation.</P> <P>(6) Develop cost-share rates for installing needed BMPs.</P> <P>(7) Assure that RCWP is in addition to and is coordinated with other related programs.</P> <P>(8) Provide guidance to State and County ASC Committees and coordinate the Agricultural Conservation Program (ACP), the Forestry Incentives Program (FIP), and related conservation programs, with RCWP.</P> <P>(9) Allocate project funds to County ASC Committees in the approved proj-ect areas.</P> <P>(10) Designate the State ASC Chairperson where a project area involves a part(s) of two or more States to chair the SCC, for that project.</P> <P>(d) <E T="03">The Soil Conservation Service (SCS) shall:</E> </P> <P>(1) Participate on the NCC, SCC and LCC.</P> <P>(2) Coordinate technical assistance and recommend appropriate agency or group to provide technical assistance on a project by project basis.</P> <P>(3) Provide technical assistance for the appropriate BMPs.</P> <P>(4) Assist the LCC in developing criteria for use by the County ASC Committees and the Conservation Districts in determining priorities of assistance among individual applicants for developing the water quality plan.</P> <P>(5) Provide technical assistance in developing and certifying the technical adequacy of the participant's water quality plan.</P> <P>(e) <E T="03">The Forest Service (FS) shall:</E> </P> <P>(1) Participate on the NCC and as appropriate, SCC and LCC.</P> <P>(2) Have technical responsibility for forestry.</P> <P>(3) Provide technical assistance for appropriate BMPs, by providing technical assistance through the State Forestry Agency (State Forester as appropriate) for planning, applying and maintaining forestry BMPs.</P> <P>(4) Participate in the monitoring and evaluation as appropriate.</P> <P>(5) As appropriate, assist in developing the water quality plan to assure that the most critical water quality problems are addressed.</P> <P>(f) <E T="03">The Science and Education Administration (SEA), through the State and County Extension Services, Appropriate, shall:</E> </P> <P>(1) Participate on the NCC, SCC and LCC.</P> <P>(2) Develop, implement, and coordinate informational and educational programs for agricultural nonpoint source water pollution control.</P> <P>(3) Encourage the State and County Extension Services to develop and carry out a comprehensive educational and informational program.</P> <P>(4) Provide technical assistance for appropriate BMPs including, but not limited to, fertilizer management, pest management, conservation tillage, and animal waste as appropriate.</P> <P>(g) <E T="03">The Economics and Statistics Service (ESS) shall:</E> </P> <P>(1) Participate on the NCC and as appropriate, SCC and LCC.</P> <P>(2) Assist in the economic evaluation of RCWP projects and BMPs.</P> <P>(3) Make data available from existing and planned ESS surveys relating to water quality and related matters.</P> <P>(4) Conduct socioeconomic research, within ESS authorities and funds, on relevant policy and program issues pertinent to RCWP.</P> <P>(5) Assist in the annual program evaluation and be responsible for the economic component of the comprehensive evaluation of selected projects.</P> <P>(h) <E T="03">The Farmers Home Administration (FmHA) shall:</E> </P> <P>(1) Participate on the NCC, SCC and LCC.</P> <P>(2) Provide assistance and coordinate their farm loan and grant programs with RCWP.</P> <P>(3) Assist in the annual program evaluation.</P> <P>(i) <E T="03">The National Rural Clean Water Coordinating Committee (NCC).</E> The NCC is chaired by the Administrator, FSA. Other members of the National Committee are Director, Office of Environmental Quality, the Administrators of, FmHA, and ESS: the Chief of FS, SCS; the Director of SEA; and the Assistant Administrator for Water and Waste Management, EPA. Nonfederal agencies such as Conservation Districts, State soil and water conservation agencies, State water quality management agencies, and other organizations <PRTPAGE P="12"/>may attend as observers. The duties of the NCC are to:</P> <P>(1) Assist the Administrator, FSA, in developing the program regulations and procedures.</P> <P>(2) Recommend to the Administrator, FSA, the project applications to be approved.</P> <P>(3) Advise the Secretary on the maximum Federal contribution to the total cost of the project and establish the maximum cost-share levels of BMPs.</P> <P>(4) Assist in coordinating individual agency programs with the RCWP.</P> <P>(5) Make recommendations as appropriate on the technical aspects of the program.</P> <P>(6) Recommend project areas and criteria for comprehensive joint USDA/EPA water quality monitoring, evaluation, and analysis.</P> <P>(7) Annually review the plans of work and recommend changes in the projects.</P> <P>(8) Annually review the progress in each project and periodically advise the Secretary, the Under Secretary for International Affairs and Commodity Programs, and Assistant Secretary for Natural Resources and the Environment on program and policy issues.</P> <P>(j) <E T="03">The State Rural Clean Water Coordinating Committee (SCC).</E> The SCC is chaired by the STC chairperson. Members include a representative of the agency members on the NCC or their designee. Other members are the State water quality agency having responsibility for the water quality management program, the State soil and water conservation agency, the State Director, Cooperative Extension Service, and others, including those recommended by the Governor, and approved by the Chairperson of SCC. Other State and local agencies, and organizations, or individuals may attend as observers. The duties of the committee are to:</P> <P>(1) Submit its recommendations for approval of project application(s) to the State ASC Committee for forwarding to the NCC, through the Administrator, FSA.</P> <P>(2) Insure that each project application referred to the state ASC committee includes a water quality monitoring plan which specifies the organization(s) responsible for general monitoring, including cost and budget breakdown by organization(s).</P> <P>(3) Assure coordination of activities at the project level by assisting in determining the composition and responsibilities of the LCC.</P> <P>(4) Assure adequate public participation, including public meeting(s), and appropriate environmental evaluation in the preparation of RCWP applications.</P> <P>(5) Provide oversight for the RCWP in the State and to assist USDA and EPA in their comprehensive, joint water quality monitoring and evaluation of selected project areas, including coordination with the LCC.</P> <P>(6) Develop procedures for coordination between the RCWP and other water quality programs.</P> <P>(7) Assist the State ASC Committee in developing the membership of the LCC. For multi county projects, there will be one LCC.</P> <P>(8) Annually review and approve the plan(s) of work and changes proposed by the LCC and forward a copy to the NCC through the administrator, FSA.</P> <P>(k) <E T="03">The Local Rural Clean Water Coordinating Committee (LCC).</E> The LCC is chaired by the County ASC Committee Chairperson. Other members include a representative of the agency members on the NCC, or their designee, where applicable, and a representative of the soil and water conservation district, the designated water quality management agency, State forestry agency, the Director, County Extension Service, and others recommended by the LCC and approved by the STC. (Where more than one county is in a project area only one LCC will be established in the proj-ect area.) The duties of the committee are to ensure that a process exists and actions are taken to implement any approved project. The duties will include, among others which may be outlined by the SCC, the following:</P> <P>(1) Assure an adequate level of public participation in implementing the project.</P> <P>(2) Provide project coordination, including development of the plan of work for implementing the approved project using various USDA agencies, local agencies and interested groups.</P> <P>(i) Enlist resources from other agencies and local groups.<PRTPAGE P="13"/> </P> <P>(ii) Conduct informational and educational activities relating to the proj-ect.</P> <P>(iii) Develop criteria with the SCC for use by the County ASC Committee and the soil conservation district to establish priorities among individual applications for developing water quality plans.</P> <P>(iv) Assure the development of an adequate plan for project monitoring and evaluation.</P> <P>(3) Consult with SCC for coordination with USDA State officials, State water quality official, and EPA regional representatives to develop criteria for project plan of work and project coordination.</P> <P>(4) Review the project Plan of Work annually and recommend changes in the approved project to the SCC.</P> <P>(l) <E T="03">State ASC Committee shall:</E> </P> <P>(1) Provide the chairperson for the SCC and be responsible for administration of the RCWP project(s) in the State.</P> <P>(2) Submit those project applications recommended by the SCC to the Administrator, FSA.</P> <P>(3) Provide overall administrative support for the RCWP through the County ASC Committee(s).</P> <P>(4) Designate a County ASC Committee Chairperson to serve as Chairperson of the LCC in multi-county projects.</P> <P>(5) Approve the BMPs for inclusion in project applications.</P> <P>(6) Be responsible for all other administrative functions as provided in these regulations.</P> <P>(m) <E T="03">The Governor of each State, at the Governor's option, may:</E> </P> <P>(1) Recommend to the SCC Chairperson appropriate additional individuals for membership on the SCC.</P> <P>(2) Furnish to the SCC a listing of the water quality priority areas in the State which are to be used by the SCCs and LCCs in considering and developing project applications.</P> <P>(n) <E T="03">the State soil and water conservation agency will:</E> </P> <P>(1) Participate on the SCC.</P> <P>(2) Assist in preparing and submitting RCWP project applications.</P> <P>(3) Carry out responsibilities of soil conservation districts, including participation on the LCC, where no soil conservation district exists.</P> <P>(o) <E T="03">The State water quality agency will:</E> </P> <P>(1) Participate on the SCC.</P> <P>(2) Provide expertise in preparing RCWP project applications.</P> <P>(3) Assist in monitoring and evaluating the effectiveness of the water quality projects.</P> <P>(p) <E T="03">The County ASC Committee shall:</E> </P> <P>(1) Be responsible for administration of the RCWP at the local level.</P> <P>(2) Provide the chairperson of the LCC.</P> <P>(3) Provide overall administrative support for the RCWP approved proj-ect through the FSA County Office, including accepting applications, administering the contracts and making payments and preparing reports.</P> <P>(4) Recommend approval of BMP's.</P> <P>(5) Together with the Soil Conservation District, determine the priority for technical assistance among individual applicants for water quality plans bases on criteria developed by the LCC to assure that the most critical water quality problems are addressed.</P> <P>(6) Establish the recommended cost share level for BMP's in the RCWP project applications in consultation with the LCC.</P> <P>(7) Utilize the Community ASC Committee(s) and LCC in encouraging farmers in the project area to install needed BMPs on the priority basis developed by the LCC.</P> <P>(8) Be responsible for developing, and annually reviewing, and carrying out the plan of work for the approved project.</P> <P>(q) <E T="03">The Soil Conservation District will:</E> </P> <P>(1) Participate on the LCC.</P> <P>(2) Assist in the preparation and submission of applications for the RCWP.</P> <P>(3) Assist in the promotion of the approved RCWP project.</P> <P>(4) Together with the County ASC Committee, determine the priority of technical assistance among individual applicants for water quality plans based on criteria developed by the LCC to assure that the most critical water quality problems are addressed.<PRTPAGE P="14"/> </P> <P>(5) Approve applicants' water quality plans and revisions.</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981; 59 FR 60299, Nov. 23, 1994]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.6</SECTNO> <SUBJECT>Officials not precluded from exercising authority.</SUBJECT> <P>Nothing in these regulations shall preclude the Secretary; Administrator, FSA; NCC; or Deputy Administrator, State and County Operations, FSA; from administering any or all phases of the RCWP programs delegated to the LCC, County ASC Committee, SCC, State ASC Committee or any employee(s) where the committee or employee fails to perform a function required in these regulations. In exercising this authority either the Secretary, Administrator, FSA, or Deputy Administrator, FSA, may delegate a person or persons to be in charge with full authority to carry out the program or other function(s) without regard to the LCC, ASC committee(s), or employee(s) for such period of time as is deemed necessary.</P> <CITA>[59 FR 60299, Nov. 23, 1994]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Project Authorization and Funding</HD> <SECTION> <SECTNO>§ 700.10</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>The RCWP is applicable in project areas that meet the criteria for eligibility contained in § 700.12 and are authorized for funding by the Secretary.</P> </SECTION> <SECTION> <SECTNO>§ 700.11</SECTNO> <SUBJECT>Availability of funds.</SUBJECT> <P>(a) The allocation of funds to the County ASC Committee(s) in a project area is to be made on the basis of the total funds needed to carry out the approved project.</P> <P>(b) The obligation of Federal funds for RCWP contracts with participants is to be made on the basis of the total contract costs.</P> </SECTION> <SECTION> <SECTNO>§ 700.12</SECTNO> <SUBJECT>Eligible project areas.</SUBJECT> <P>(a) Only those project areas which reflect the water quality priority concerns developed through the established water quality management program planning process and have identified agricultural nonpoint source water quality problems are eligible for authorization under RCWP. Only those critical areas or sources of pollutants significantly contributing to the water quality problems are eligible for financial and technical assistance.</P> <P>(b) An RCWP project area is a hydrologically related land area. Exceptions may be made for ease of administration, or to focus on concentrated critical areas. To be designated as an RCWP project area eligible for authorization, the area's water quality problems must be related to agricultural nonpoint source pollutants, including but not limited to, sediment, animal waste, irrigation return flows, runoff, or leachate that contain high concentrations of nitrogen, phosphorus, dissolved solids, toxics (pesticides and heavy metals), or high pathogen levels.</P> </SECTION> <SECTION> <SECTNO>§ 700.13</SECTNO> <SUBJECT>Project applications.</SUBJECT> <P>Existing and subsequent project applications submitted for consideration must contain adequate information on each item specified in § 700.14. Instructions on such information requirements will be issued by the Administrator, FSA. Opportunity will be provided prior to final approval of a project for the LCC and the SCC, in consultation with the Govenor, through the applicable County and State ASC Committees, for modification necessary to bring them into conformance with the provisions of these regulations.</P> </SECTION> <SECTION> <SECTNO>§ 700.14</SECTNO> <SUBJECT>Review and approval of project applications.</SUBJECT> <P>(a) In reviewing applications and recommending priorities, the NCC will consider the following:</P> <P>(1) Severity of the water quality problem caused by agricultural and silvicultural related pollutants, including:</P> <P>(i) State designated uses of the water affected.</P> <P>(ii) Kinds, sources, and effects of pollutants.</P> <P>(iii) Miles of stream or acres of water bodies affected, extent of groundwater contamination.</P> <P>(2) Demonstration of public benefits from the project, including:</P> <P>(i) Effects on human health.<PRTPAGE P="15"/> </P> <P>(ii) Population benefited by improved water quality.</P> <P>(iii) Effects on the natural environment.</P> <P>(iv) Additional beneficial uses of the waters that result from improvement of the water quality.</P> <P>(3) Economic, and technical feasibility to control water quality problems within the life of the project, including:</P> <P>(i) Size of the area and extent of BMPs needed.</P> <P>(ii) Cost per participant and cost per acre or source for solution of problem.</P> <P>(iii) Cost effectiveness of BMPs.</P> <P>(iv) Adequacy of planned actions to meet the project's objectives.</P> <P>(4) Suitability of the project for the experimental RCWP in the testing of programs, policies and procedures for the control of agricultural non-point source pollution, including:</P> <P>(i) A project representative of a geographic area with significant water quality problems.</P> <P>(ii) The potential of the project for monitoring and evaluation, including existing base line data.</P> <P>(5) State, local and other input in the project area, including:</P> <P>(i) Funds for cost-sharing general monitoring and technical assistance.</P> <P>(ii) Commitment of local leadership to promote the program.</P> <P>(iii) Commitment of farmers and ranchers to participate in RCWP.</P> <P>(6) The project's contribution to meeting the national water quality goals taking into consideration of other major sources of pollutants which affect the water quality in or near the project area.</P> <P>(b) Based on the project application, the NCC is to recommend an upper limit of the Federal contribution to the total cost of the project. This includes both BMP cost-share and technical assistance costs.</P> <P>(c) All project applications will be reviewed by EPA. BMPs approval for funding require EPA concurrence, except that the Secretary may assume EPA's concurrence, if EPA does not act within 15 days following receipt of the request for concurrence.</P> <P>(d) The Secretary will approve proj- ects for funding taking into consideration the recommendations of the NCC and consultation with EPA. The Chairperson, State ASC Committee, through the SCC, will assure that involved Federal, State, and local agencies are informed of the project approval.</P> </SECTION> <SECTION> <SECTNO>§ 700.15</SECTNO> <SUBJECT>Transfer of funds.</SUBJECT> <P>(a) Upon approval of a project, the Administrator, FSA, will transfer funds to the State(s) ASC Committee for funding the project. The State committee will transfer funds to the County ASC Committee(s) for the county or counties in an approved proj-ect.</P> <P>(b) FSA will transfer funds to the applicable agency or organization providing specific technical assistance and/or expanded information and education. The transfer will be made on a project by project basis.</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.16</SECTNO> <SUBJECT>Termination of project funding.</SUBJECT> <P>(a) Based on evidence of failure to accomplish the approved project objectives, including inadequate level of participation, the Administrator, FSA, may issue a termination notice after conferring with the Administrator, EPA, and the NCC.</P> <P>(b) The State ASC Committee shall give 10-day written notice to the applicable County ASC Committee of intent to terminate project funding. The termination shall establish the effective date of termination and the date for return of funds.</P> <P>(c) After receipt of a project termination, the County ASC Committee shall not make any new commitments or enter into any new RCWP contracts. Those contracts in force at the time of project termination will remain in force until completed.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Participant's RCWP Contracts</HD> <SECTION> <SECTNO>§ 700.20</SECTNO> <SUBJECT>Eligible land.</SUBJECT> <P>RCWP is only applicable to privately owned agricultural lands in approved project areas. Indian tribal lands and lands owned by irrigation districts are eligible lands.</P> </SECTION> <SECTION> <PRTPAGE P="16"/> <SECTNO>§ 700.21</SECTNO> <SUBJECT>Eligible person (participant).</SUBJECT> <P>(a) Any land owner or operator whose land or activities in a project area is contributing to the area's agricultural nonpoint source water quality problems and who has an approved water quality plan is eligible to enter into an RCWP contract. For the purpose of this section, an eligible person is an individual, partnership, corporation (except corporations whose stock is publicly traded), Indian tribe, irrigation district or other entity.</P> <P>(b) Federal, State or local governments, or subdivisions thereof (except irrigation districts), are not considered as an eligible person for RCWP contracts.</P> <P>(c) This program will be conducted in compliance with all requirements respecting nondiscrimination as contained in the Civil Rights Act of 1964 and amendments thereto and the Regulations of the Secretary of Agriculture (7 CFR 15.1 through 15.12)</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.22</SECTNO> <SUBJECT>Application for assistance.</SUBJECT> <P>(a) Land owners or operators in an approved project area must apply for RCWP assistance through the office of the County ASC Committee(s) by completing the prescribed application form.</P> <P>(b) The priority for developing water quality plans among applicants is to be determined by the County ASC Committee and the soil conservation district based on the criteria developed by the LCC in consultation with the SCC, with technical assistance from SCS.</P> </SECTION> <SECTION> <SECTNO>§ 700.23</SECTNO> <SUBJECT>Water quality plan.</SUBJECT> <P>(a) The participant's water quality plan, developed with technical assistance and certification by the SCS or its designee and approved by the CD, is to include appropriate approved BMPs. Such BMPs must reduce the amount of pollutants that enter a stream, aquifer, or lake by:</P> <P>(1) Methods such as reducing the application rates or changing the application methods or potential pollutants.</P> <P>(2) Methods such as practices or combinations of practices which prevent potential pollutants from leaving source areas or reduce the amount of potential pollutants that reach a stream or lake after leaving a source area.</P> <P>(b) Participants' water quality plans shall include BMPs for the treatment of all critical areas or sources on the farm on that land within the project area regardless of eligibility for cost-sharing with RCWP funds. Management type BMPs which are not cost-shared but for which technical advice will be given project participants shall be listed in the plan. A water quality plan is not required for that portion of a farm that does not include a critical area or source.</P> <P>(c) The participant is responsible for compliance with all applicable Federal, State, and local laws including those relating to the environment, in installing BMPs to solve the nonpoint source water quality problems.</P> <P>(d) Time schedules for implementing BMPs are to be provided in the participant's water quality plan.</P> <P>(e) The SCS or its designee shall make an annual status review to assure the technical adequacy of the implementation of the water quality plan.</P> </SECTION> <SECTION> <SECTNO>§ 700.24</SECTNO> <SUBJECT>Cost-sharing.</SUBJECT> <P>(a) The maximum cost-share for each project will be approved by the Secretary, taking into consideration the recommendation of the NCC. The Federal cost-share for each BMP shall not exceed 75 percent of the cost of carrying out the practice unless otherwise approved by the Administrator, FSA.</P> <P>(b) The combined cost-sharing by Federal, State, or Subdivision thereof shall not exceed 100% of the cost of carrying out the BMP.</P> <P>(c) The County ASC Committee(s) in consultation with the LCC will annually set maximum individual BMP cost-share rates for the project area.</P> <P>(d) BMPs to be cost shared must have a positive effect on water quality.</P> <P>(e) Cost sharing is not to be made available for measures installed primarily for:</P> <P>(1) Bringing additional land into crop production.</P> <P>(2) Increasing production on existing crop land.</P> <P>(3) Flood protection.<PRTPAGE P="17"/> </P> <P>(4) Structural measures authorized for installation under Pub. L. 83-566, Watershed Protection and Flood Prevention Act.</P> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.25</SECTNO> <SUBJECT>RCWP contract.</SUBJECT> <P>(a) In order to participate in the RCWP, each landowner, operator, or person who controls or shares in the control of a tract of land on which one or more of the BMP's will be performed must execute the RCWP contract in which they agree to carry out the water quality plan.</P> <P>(b) The participant must furnish satisfactory evidence of his or her control of the tract of land on which one or more of the BMP's will be performed.</P> <P>(c) Cost-sharing payments cannot be provided for any measure that is initiated before the contract is approved by the County ASC Committee.</P> <P>(d) RCWP contracts shall include the basic contract document, the participant's water-quality plan, schedule of operations, and special provisions as needed.</P> <P>(e) Technical assistance will be provided to participants to develop the water quality plan and to install BMPs.</P> <P>(f) SCS or its designee shall approve the technical adequacy of the Water Quality Plan.</P> <P>(g) Participants shall install BMPs according to the specifications that are applicable at the time the contract is signed or the measures are installed.</P> <P>(h) The contract period is to be not less than 3 and not more than 10 years. A contract is to extend for at least 1 year after the application of the last cost-shared BMPs. All contract items are to be accomplished prior to contract expiration.</P> <P>(i) BMPs are to be maintained by the participant at no cost to the RCWP.</P> <P>(j) All BMPs in the water-quality plan shall be maintained for the established life span of the BMP.</P> <P>(k) The County ASC Committee in consultation with the LCC shall establish a BMP life span for each BMP offered in the approved project area. Each BMP cost-shared shall have a life span of at least 5 years, unless otherwise approved by the Administrator, FSA.</P> <P>(l) A participant may enter into a pooling agreement with other participants to solve mutual water quality problems.</P> <P>(m) Participants are responsible for:</P> <P>(1) Accomplishing the water quality plan.</P> <P>(2) Obtaining and maintaining any required permits and easements necessary to perform the planned work.</P> <P>(3) Applying or arranging for the application of BMPs, as scheduled in the plan, according to approved standards and specifications.</P> <P>(4) The operation and maintenance of BMPs installed during the contract period.</P> <P>(5) Obtaining the authorities, rights, easements, or other approvals necessary to maintain BMPs in keeping with applicable laws and regulations.</P> <P>(n) Unless otherwise approved by the NCC, the County ASC Committees shall not enter into any new RCWP contracts after five (5) years from the date when RCWP funds are first made available to the project.</P> <SECAUTH>(Pub. L. 96-108, 98 Stat. 821, 835 and Pub. L. 96-528, 94 Stat. 3095, 3111)</SECAUTH> <CITA>[45 FR 14009, Mar. 4, 1980, as amended at 48 FR 42803, Sept. 20, 1983]</CITA> </SECTION> <SECTION> <SECTNO>§ 700.26</SECTNO> <SUBJECT>Contract modifications.</SUBJECT> <P>(a) The County ASC Committee by mutual agreement with the landowner or operator, may modify contracts previously entered into if it is determined to be desirable to carry out the purposes of the program, facilitate the practical administration thereof, or to accomplish equitable treatment with respect to other conservation, land-use, and/or water quality programs.</P> <P>(b) Requirements of active contracts may be modified by the County ASC Committee only if such modifications are specifically provided for in these regulations. The concurrence of SCS or its designee and the CD are necessary when modifications involve a technical aspect of the participant's water quality plan. A contract may be modified only if it is determined that such modifications are desirable to carry out purposes of the program or to facilitate the program's practical administration.<PRTPAGE P="18"/> </P> <P>(c) Contracts may be modified when the participants add or delete land to the farm.</P> <P>(d) Contracts may be modified to add, delete, or substitute BMPs when:</P> <P>(1) The installed measure failed to achieve the desired results through no fault of the participant.</P> <P>(2) The installed measure deteriorated because of conditions beyond the control of the participant.</P> <P>(3) Another BMP will achieve the desired results.</P> <P>(4) The extent of the BMP is changed.</P> <P>(e) Contract modifications are not required when items of work are accomplished prior to scheduled completion or within 1 year following the year of scheduled completion. Other time schedule revisions will require modification.</P> <P>(f) If, during the contract period, all or part of the right and interest in the land is transferred by sale or other transfer action, the contract is terminated on that portion of the contract, the participant:</P> <P>(1) Forfeits all right to any future cost-share payments on the transferred portion.</P> <P>(2) Must refund all cost-share payments that have been made on the transferred land unit unless the new land owner or operator becomes a party to the contract, except the payment may be retained where it is determined by the County ASC Committee after consultation with the technical agency and the CD, that the established BMPs will provide water quality benefits for the designed life of the BMP.</P> <P>(g) If the new land owner or operator becomes a party to the contract:</P> <P>(1) Payment which has been earned, may be made to the participant who applied the BMPs and had control prior to the transfer.</P> <P>(2) The new land owner or operator is to assume all obligations of the previous participant with respect to the transferred land.</P> <P>(3) The contract with the new participant is to remain in effect with the original terms and conditions, except that;</P> <P>(4) The original contract is to be modified in writing to show the changes caused by the transfer. If the modification is not acceptable to the County ASC Committee, the provisions of paragraphs (f)(1) and (2) of this section apply.</P> </SECTION> <SECTION> <SECTNO>§ 700.27</SECTNO> <SUBJECT>Cost-share payment.</SUBJECT> <P>(a) <E T="03">General.</E> Participants are to obtain or contract for materials or services as needed to install BMPs. Federal cost-share payments are to be made by the County ASC Committee upon certification by the District Conservationist, SCS, or designee, that the BMPs, or an identifiable unit thereof, have been properly carried out and meet the appropriate standards and specifications.</P> <P>(b) <E T="03">Payment maximum.</E> The maximum RCWP cost-share payment to a participant shall be limited to $50,000.</P> <P>(c) <E T="03">Basis for cost-share payment.</E> (1) Cost-share payments are to be made by the County ASC Committee at the cost-share percentage specified in the project approval notice and by one of the following methods as set out in the contract:</P> <P>(i) Average cost; or</P> <P>(ii) Actual cost but not to exceed the average cost.</P> <P>(2) If the average cost at the time of starting the installation of a BMP or identifiable unit is less than the costs specified in the contract, payment is to be at the lower rate. If the costs at the start of installation are higher, payment may be made at the higher rate. A modification will be necessary if the higher cost results in a significant increase in the total cost-share obligation. Cost-share payment is not to be made until the modification reflecting the increase is approved.</P> <P>(d) <E T="03">Average cost development.</E> Average costs are to be developed by the County ASC Committee for each proj-ect using cost data from the local area. These costs shall be reviewed by the SCC for consistency with average costs in other USDA programs. These average costs shall be updated annually by the County ASC Committee in consultation with the LCC.</P> <P>(e) <E T="03">Application for payment.</E> Cost-share payments shall be made by the County ASC Committee after a participant has completed a BMP or an identifiable unit of a BMP and it is determined to <PRTPAGE P="19"/>meet standards and specifications. Application for payment must be submitted to the County ASC Committee, on the prescribed form and be supported by such cost receipts as are required by the County ASC Committee. It is the participant's responsibility to apply for payments.</P> <P>(f) <E T="03">Authorizations for payments to suppliers.</E> (1) The contract may authorize that part or all of the Federal cost share for a BMP or an identifiable unit be made directly to suppliers of materials or services. The materials or services must be delivered or performed before payment is made.</P> <P>(2) Federal cost shares will not be in excess of the cost share attributable to the material or service used or not in excess of the cost share for all identifiable units as may be requested by the participant.</P> <P>(g) <E T="03">Material inspection and analysis.</E> When authorizations for payments to suppliers are specified, the County ASC Committee, its representatives, or the Federal Government reserve the right to inspect, sample, and analyze materials or services prior to their use.</P> <P>(h) <E T="03">Assignments, set-offs, and claims.</E> (1) Any person who may be entitled to any cost-share may assign rights thereto in accordance with regulations governing the assignments of payments. (31 U.S.C. 203, as amended, and 41 U.S.C. 15, as amended.)</P> <P>(2) If any participant to whom compensation is payable under RCWP is indebted to the United States and such indebtedness is listed on the county register of indebtedness maintained by the County ASC Committee, the compensation due the participant must be used (set-off) to reduce that indebtedness. Indebtedness to USDA is to be given first consideration. Set-offs made pursuant to this section are not to deprive the participant of any right to contest the justness of the indebtedness involved. (See 7 CFR part 13.)</P> <P>(3) Any cost-share payment due any participant shall be allowed without deduction of claims for advances except as provided for above and without regard to any claim or lien against any crop, or proceeds thereof, in favor of the participant or any other creditor.</P> <P>(i) <E T="03">Access to land unit and records.</E> The County ASC Committee, the agency providing technical assistance or representatives thereof, shall have the right of access at reasonable times to land under application or contract, and the right to examine any program records to ascertain the accuracy of any representations made in the applications or contract.</P> <P>(j) <E T="03">Suspension of payments.</E> No cost-share payments will be made pending a decision on whether or not a contract violation has occurred.</P> <P>(k) <E T="03">Ineligible payments.</E> The filing of requests for payment for BMPs not carried out, or for BMPs carried out in such a manner that they do not meet the contract specifications, constitutes a violation of the contract.</P> </SECTION> <SECTION> <SECTNO>§ 700.28</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) The applicant may, prior to execution of the contract, request that the County ASC Committee review or reconsider administrative criteria being used in developing his or her contract.</P> <P>(1) The applicant shall make a written request to the County ASC Committee setting forth the basis for the appeal.</P> <P>(2) The County ASC Committee shall have 30 days in which to make a decision and notify the applicant in writing.</P> <P>(3) The decision of the County ASC Committee may be appealed to the State ASC Committee.</P> <P>(4) The State ASC Committee decision shall be final.</P> <P>(b) The applicant/participant may request and receive a review by the SCS State Conservationist of criteria used in developing the water quality plan or BMP specifications.</P> <P>(c) After the contract has been executed, the participant may request and receive a review of administrative procedures under the FSA appeals procedures set out in 7 CFR part 780.</P> </SECTION> <SECTION> <SECTNO>§ 700.29</SECTNO> <SUBJECT>Contract violations.</SUBJECT> <P>(a) The following actions constitute a violation of the RCWP contract by a participant:</P> <P>(1) Knowingly or negligently damaging or causing BMPs to become impaired.</P> <P>(2) Failing to comply with the terms of the contract.</P> <P>(3) Filing a false claim.<PRTPAGE P="20"/> </P> <P>(4) Misusing conservation materials or services.</P> <P>(5) Adopting a land use or practice during the contract period which tends to defeat the purposes of the program.</P> <P>(b) <E T="03">Contract termination as a result of violations.</E> (1) The participant agrees to forfeit all rights to further cost-sharing payments under a contract and to refund all cost-share payments received if the County ASC Committee with the concurrence of the State ASC Committee, determines that:</P> <P>(i) There was a violation of the contract during the time the participant had control of the land.</P> <P>(ii) The violation was of such a nature as to warrant termination of the contract.</P> <P>(2) The participant shall be obligated to refund all cost-share payments, including those paid to vendors for materials and services.</P> <P>(c) <E T="03">Payment adjustments and refunds resulting from violations.</E> (1) The participant agrees to refund cost-share payments received under the contract or to accept payment adjustments if the County ASC Committee determines and the State ASC Committee concurs that:</P> <P>(i) There was a violation of the contract during the time the participant had control of the land.</P> <P>(ii) The nature of the violation does not warrant termination of the contract.</P> <P>(2) Payment adjustments may include decreasing the rate of the cost share, or deleting from the contract a cost-share commitment, or withholding cost-share payments earned but not paid. The participant who signs the contract may be obligated to refund cost-share payments.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Monitoring and Evaluation</HD> <SECTION> <SECTNO>§ 700.40</SECTNO> <SUBJECT>General program monitoring and evaluation.</SUBJECT> <P>(a) <E T="03">Requirement.</E> All approved RCWP projects will be monitored in sufficient detail to determine BMP application progress and to generally document water quality improvement trends through the life of the project. This will include, among others, data on BMP installation progress, payments made, refunds and periodic water quality monitoring for addressing short and long-term trends in water quality.</P> <P>(b) <E T="03">Monitoring Report.</E> A water quality monitoring report will be submitted as a part of the annual progress report. The initial report will include:</P> <P>(1) A description of water quality monitoring strategy for the area.</P> <P>(2) Data collection schedule.</P> <P>(3) Parameters being monitored (and baseline values).</P> <P>(4) Collection and analytical methods.</P> <P>(5) A summary of existing data and trends.</P> <FP>Subsequent reports will update the initial data and report any significant changes in water quality land use.</FP> <P>(c) <E T="03">Program Monitoring Funding.</E> The project application and the proposed monitoring plan are to include an estimate of the local and State financial and technical support. General monitoring will not be financed with RCWP funds.</P> </SECTION> <SECTION> <SECTNO>§ 700.41</SECTNO> <SUBJECT>Comprehensive USDA/EPA joint project water quality monitoring, evaluation, and analysis.</SUBJECT> <P>(a) <E T="03">Requirement.</E> The Secretary and Administrator, EPA will jointly select a limited number of projects to be comprehensively monitored and evaluated from a list of projects recommended by the NCC. The NCC will develop criteria for selecting the project areas.</P> <P>(b) <E T="03">Project Selection.</E> The NCC will recommend projects for this comprehensive program. The project areas are to be representative of the agricultural and silvicultural nonpoint source pollution problems.</P> <P>(c) <E T="03">Plan Development.</E> After a proj-ect is selected for the comprehensive monitoring and evaluation, the SCC is to submit within 90 days, a plan for USDA-EPA review and approval. USDA and EPA will have 30 days for the plan review and approval process.</P> <P>(d) <E T="03">Plan Requirements.</E> In general, the comprehensive monitoring plan will address and include the following:</P> <P>(1) <E T="03">Objective.</E> Define the purpose and scope of the monitoring program and establish clear objectives for each activity proposed.</P> <P>(2) <E T="03">Monitoring Strategy.</E> Define the basic hydrological and meteorological <PRTPAGE P="21"/>factors within the proposed RCWP project area and identify the strategy and parameters to be used to identify the changes in water quality attributable to the installation of BMPs. Wherever possible, identify and quantify changes in land use, land use patterns and farming practices that will affect the quantity, quality or timing of nonpoint source pollutants reaching an aquatic system and detail information as to number and location of sampling stations and the frequency of sample collection.</P> <P>(3) <E T="03">Socioeconomic Impacts.</E> Identify the positive and negative impacts on the landowners in the project area and estimate the community or off-site benefits expected of the project if completed as planned.</P> <P>(4) <E T="03">Institutional Aspects.</E> Identify and clearly define the role and responsibility for each participating agency including, where appropriate fiscal and manpower commitments.</P> <P>(5) <E T="03">Educational Aspects.</E> Clearly define the approache(s) to be used to inform and educate individual landowners. Include procedures for periodic evaluation of this effort so the mid-course corrections can be made if needed.</P> <P>(6) <E T="03">Quality Assurance.</E> To insure that the data collected is usable to make National projections, a quality assurance program must be included that is consistent with that of the EPA Region within which the project is located.</P> <P>(7) <E T="03">Data Storage.</E> The data collected on comprehensive monitoring projects must be available to USDA and EPA RCWP user groups.</P> <P>(e) <E T="03">Reporting.</E> Reports for these projects are to be made at least annually to the NCC based on guidance sent to the SCC by the Administrator, FSA.</P> <P>(f) <E T="03">Funding.</E> Funding for the comprehensive monitoring will be provided from RCWP funds and other authorizations.</P> </SECTION> <SECTION> <SECTNO>§ 700.42</SECTNO> <SUBJECT>Program evaluation.</SUBJECT> <P>(a) The RCWP will be evaluated annually by the USDA. The evaluation will be based on the reports provided in these regulations and on special studies undertaken by USDA or EPA as part of the RCWP program.</P> <P>(b) The USDA Deputy Under Secretary for International Affairs and Commodity Program will have the responsibility for coordinating the program evaluation and preparing an annual report for transmittal to the Secretary of Agriculture and the Administrator of EPA. The Deputy Assistant Secretary for Natural Resources and the Director of Economics, Policy Analysis and Budget, USDA, and the Assistant Administrator for Water and Waste Management, EPA will assist in this effort.</P> </SECTION> <SECTION> <SECTNO>§ 700.43</SECTNO> <SUBJECT>Public benefits when installing BMP's.</SUBJECT> <P>All BPM's implemented under this program shall be in compliance with regulations promulgated under part 799 on environmental quality and related environmental concerns or similar regulations issued by a technical agency. Persons responsible for any aspect of performing BMPs shall carry out their responsibilities in such a way as to promote public benefits:</P> <P>(a) By improving or preserving environmental quality and ecological balance.</P> <P>(b) By preventing or abating pollution and other environmental degradation.</P> <P>(c) Benefiting the community by means such as preserving open space or enhancing the appearance of the area.</P> <P>(d) Benefiting wildlife and other desirable life forms.</P> <P>(e) Preserving historic, archaeological, or scenic sites, wetlands, ecologically critical areas and prime farmland.</P> <P>(f) Avoiding the creation of hazards to persons or animals.</P> <P>(g) Avoiding actions that may adversely affect an endangered or threatened species and flood plains.</P> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 701</EAR> <HD SOURCE="HED">PART 701—EMERGENCY CONSERVATION PROGRAM AND CERTAIN RELATED PROGRAMS PREVIOUSLY ADMINISTERED UNDER THIS PART</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>701.1</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>701.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>701.3</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>701.4</SECTNO> <SUBJECT>Producer eligibility.</SUBJECT> <SECTNO>701.5</SECTNO> <SUBJECT>Land eligibility.</SUBJECT> <SECTNO>701.6-701.9</SECTNO> <SUBJECT>[Reserved]<PRTPAGE P="22"/> </SUBJECT> <SECTNO>701.10</SECTNO> <SUBJECT>Qualifying minimum cost of restoration.</SUBJECT> <SECTNO>701.11</SECTNO> <SUBJECT>Prohibition on duplicate payments.</SUBJECT> <SECTNO>701.12</SECTNO> <SUBJECT>Eligible ECP practices.</SUBJECT> <SECTNO>701.13</SECTNO> <SUBJECT>Submitting requests.</SUBJECT> <SECTNO>701.14</SECTNO> <SUBJECT>Onsite inspections.</SUBJECT> <SECTNO>701.15</SECTNO> <SUBJECT>Starting practices before cost-share request is submitted; non-entitlement to payment; payment subject to the availability of funds.</SUBJECT> <SECTNO>701.16</SECTNO> <SUBJECT>Practice approval.</SUBJECT> <SECTNO>701.17-701.20</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>701.21</SECTNO> <SUBJECT>Filing payment application.</SUBJECT> <SECTNO>701.22</SECTNO> <SUBJECT>Eligibility to file for cost-share assistance.</SUBJECT> <SECTNO>701.23</SECTNO> <SUBJECT>Eligible costs.</SUBJECT> <SECTNO>701.24</SECTNO> <SUBJECT>Dividing cost-share among more than one participant.</SUBJECT> <SECTNO>701.25</SECTNO> <SUBJECT>Practices carried out with aid from ineligible persons.</SUBJECT> <SECTNO>701.26</SECTNO> <SUBJECT>Maximum cost-share percentage.</SUBJECT> <SECTNO>701.27</SECTNO> <SUBJECT>Maximum ECP payments per person.</SUBJECT> <SECTNO>701.28-701.30</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>701.31</SECTNO> <SUBJECT>Maintenance and proper use of practices.</SUBJECT> <SECTNO>701.32</SECTNO> <SUBJECT>Failure to comply with program provisions.</SUBJECT> <SECTNO>701.33</SECTNO> <SUBJECT>Death, incompetency, or disappearance.</SUBJECT> <SECTNO>701.34</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>701.35</SECTNO> <SUBJECT>Compliance with regulatory measures.</SUBJECT> <SECTNO>701.36</SECTNO> <SUBJECT>Schemes and devices and claims avoidances.</SUBJECT> <SECTNO>701.37</SECTNO> <SUBJECT>Loss of control of property during the practice life span.</SUBJECT> <SECTNO>701.38-701.40</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>701.41</SECTNO> <SUBJECT>Cost-share assistance not subject to claims.</SUBJECT> <SECTNO>701.42</SECTNO> <SUBJECT>Assignments.</SUBJECT> <SECTNO>701.43</SECTNO> <SUBJECT>Information collection requirements.</SUBJECT> <SECTNO>701.44</SECTNO> <SUBJECT>Agricultural Conservation Program (ACP) contracts.</SUBJECT> <SECTNO>701.45</SECTNO> <SUBJECT>Forestry Incentives Program (FIP) contracts.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 95-334, 92 Stat. 420, 16 U.S.C. 2201 <E T="03">et seq.</E> </P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>69 FR 10302, Mar. 4, 2004, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 701.1</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) Subject to the availability of funds, this part provides the terms, conditions and requirements of the Emergency Conservation Program (ECP) administered by the Farm Service Agency (FSA).</P> <P>(b) ECP is administered by the Administrator, FSA through the Deputy Administrator, FSA, and shall be carried out in the field by State and county FSA committees (State and county committees), subject to the availability of funds. Except as otherwise provided in this rule, discretionary determinations to be made under this rule will be made by the Deputy Administrator. Matters committed to the discretion of the Deputy Administrator shall be considered in all cases to be permissive powers and no person shall, under any circumstances, be considered to be entitled to an exercise of such power in their favor.</P> <P>(c) State and county committees, and representatives and employees, do not have authority to modify or waive any regulations in this part.</P> <P>(d) The State committee may take any action authorized or required of the county committee by this part, but which the county committee has not taken, such as:</P> <P>(1) Correct or require a county committee to correct any action taken by such county committee that is not in accordance with this part; or</P> <P>(2) Require a county committee to withhold taking any action that is not in accordance with this part.</P> <P>(e) No provision or delegation herein to a State or county committee shall preclude the Administrator, FSA, or a designee, from determining any question arising under the program or from reversing or modifying any determination made by a State or county committee.</P> <P>(f) The Deputy Administrator may authorize State and county committees to waive or modify deadlines and other requirements in cases where lateness or failure to meet such other requirements does not adversely affect the operation of the program.</P> <P>(g) The Deputy Administrator may limit the authority of state and county committees to approve cost share in excess of specified amounts.</P> <P>(h) Data furnished by the applicants will be used to determine eligibility for program benefits. Furnishing the data is voluntary; however, the failure to provide data could result in program benefits being withheld or denied.</P> <P>(i) FSA may consult with any other USDA agency for such assistance as is determined by FSA to be necessary to implement the ECP. FSA is responsible for the technical aspects of ECP but may enter into a Memorandum of <PRTPAGE P="23"/>Agreement with another party to provide technical assistance. If this limitation results in significant hardship to producers in a county the State committee may request in writing that the Deputy Administrator waive this requirement for that county.</P> <P>(j) The provisions in this part shall not create an entitlement in any person to any ECP cost share or claim or any particular notice or form or procedure.</P> <P>(k) Additional terms and conditions may be set forth in the application or the forms participants will be required to sign for participation in the ECP.</P> </SECTION> <SECTION> <SECTNO>§ 701.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) The terms defined in part 718 of this chapter shall be applicable to this part and all documents issued in accordance with this part, except as otherwise provided in this section.</P> <P>(b) The following definitions shall apply to this part:</P> <P> <E T="03">Agricultural producer</E> means an owner, operator, or tenant of a farm or ranch used to produce for food or fiber, crops (including but not limited to, grain or row crops; seed crops; vegetables or fruits; hay forage or pasture; orchards or vineyards; flowers or bulbs; or field grown ornamentals) or livestock (including but not limited to, dairy or beef cattle; poultry; swine; sheep or goats; fish or other animals raised by aquaculture; other livestock or fowl) for commercial production. Producers of animals raised for recreational uses only are not considered agricultural producers.</P> <P> <E T="03">Annual agricultural production</E> means production of crops for food or fiber in a commercial operation that occurs on an annual basis under normal conditions.</P> <P> <E T="03">Applicant</E> means a person who has submitted to FSA a request to participate in the ECP.</P> <P> <E T="03">Cost-share payment</E> means the payment made by FSA to assist a program participant under this part to establish practices required to address qualifying damage suffered in connection with a qualifying disaster.</P> <P> <E T="03">Deputy Administrator</E> means the Deputy Administrator for Farm Programs, FSA, the ECP Program Manager, or designee.</P> <P> <E T="03">Farmland</E> means land devoted to agricultural production, including land used for aquaculture, or other land as may be determined by the Deputy Administrator.</P> <P> <E T="03">Program year</E> means the applicable Federal fiscal year.</P> </SECTION> <SECTION> <SECTNO>§ 701.3</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>(a) FSA will provide cost-share assistance to farmers and ranchers to rehabilitate farmland damaged by wind erosion, floods, hurricanes, or other natural disasters as determined by the Deputy Administrator, and to carry out emergency water conservation measures during periods of severe drought.</P> <P>(b) The objective of the ECP is to make cost-share assistance available to eligible participants on eligible land for certain practices, to rehabilitate farmland damaged by floods, hurricanes, wind erosion, or other natural disasters, and for the installation of water conservation measures during periods of severe drought.</P> <P>(c) Payments may also be made under this part for:</P> <P>(1) Emergency water conservation or water enhancement measures (including measures to assist confined livestock) during periods of severe drought; and</P> <P>(2) Floodplain easements for runoff and other emergency measures that the Deputy Administrator determines is necessary to safeguard life and property from floods, drought, and the products of erosion on any watershed whenever fire, flood, or other natural occurrence is causing or has caused, a sudden impairment of the watershed.</P> <P>(d) Payments under this part are subject to the availability of appropriated funds and any limitations that may otherwise be provided for by Congress.</P> </SECTION> <SECTION> <SECTNO>§ 701.4</SECTNO> <SUBJECT>Producer eligibility.</SUBJECT> <P>(a) To be eligible to participate in the ECP the Deputy Administrator must determine that a person is an agricultural producer with an interest in the land affected by the natural disaster, and that person must be liable for or have paid the expense that is the subject of the cost share. The applicant must be a landowner or user in the <PRTPAGE P="24"/>area where the qualifying event has occurred, and must be a party who will incur the expense that is the subject of the cost share.</P> <P>(b) Federal agencies and States, including all agencies and political subdivisions of a State, are ineligible to participate in the ECP.</P> <P>(c) All producer eligibility is subject to the availability of funds and an application may be denied for any reason.</P> </SECTION> <SECTION> <SECTNO>§ 701.5</SECTNO> <SUBJECT>Land eligibility.</SUBJECT> <P>(a) For land to be eligible, the Deputy Administrator must determine that land that is the subject of the cost share:</P> <P>(1) Will have new conservation problems caused as a result of a natural disaster that, if not treated, would:</P> <P>(i) Impair or endanger the land;</P> <P>(ii) Materially affect the productive capacity of the land;</P> <P>(iii) Represent unusual damage that, except for wind erosion, is not of the type likely to recur frequently in the same area; and</P> <P>(iv) Be so costly to repair that Federal assistance is or will be required to return the land to productive agricultural use. Conservation problems existing prior to the disaster are not eligible for cost-share assistance.</P> <P>(2) Be physically located in a county in which the ECP has been implemented; and</P> <P>(3) Be one of the following:</P> <P>(i) Land expected to have annual agricultural production,</P> <P>(ii) A field windbreak or a farmstead shelterbelt on which the ECP practice to be implemented involves removing debris that interferes with normal farming operations on the farm and correcting damage caused by the disaster; or</P> <P>(iii) A farm access road on which debris interfering with the normal farming operation needs to be removed.</P> <P>(b) Land is ineligible for cost share if the Deputy Administrator determines that it is, as applicable:</P> <P>(1) Owned or controlled by the United States;</P> <P>(2) Owned or controlled by States, including State agencies or other political subdivisions of a State;</P> <P>(3) Protected by a levee or dike that was not effectively and properly functioning prior to the disaster, or is protected, or intended to be protected, by a levee or dike not built to U.S. Army Corps of Engineers, NRCS, or comparable standards;</P> <P>(4) Adjacent to water impoundment reservoirs that are subject to inundation when the reservoir is filled to capacity;</P> <P>(5) Land on which levees or dikes are located;</P> <P>(6) Subject to frequent damage or susceptible to severe damage according to paragraph (c) of this section;</P> <P>(7) Subject to flowage or flood easements and inundation when water is released in normal operations;</P> <P>(8) Between any levee or dike and a stream, river, or body of water, including land between two or more levees or dikes;</P> <P>(9) Located in an old or new channel of a stream, creek, river or other similar body of water, except that land located within or on the banks of an irrigation canal may be eligible if the Deputy Administrator determines that the canal is not a channel subject to flooding;</P> <P>(10) In greenhouses or other confined areas, including but not limited to, land in corrals, milking parlors, barn lots, or feeding areas;</P> <P>(11) Land on which poor farming practices, such as failure to farm on the contour, have materially contributed to damaging the land;</P> <P>(12) Unless otherwise provided for, not considered to be in annual agricultural production, such as land devoted to stream banks, channels, levees, dikes, native woodland areas, roads, and recreational uses; or</P> <P>(13) Devoted to trees including, but not limited to, timber production.</P> <P>(c) To determine the likely frequency of damage and of the susceptibility of the land to severe damage under paragraph (b)(6) of this section, FSA will consider all relevant factors, including, but not limited to, the location of the land, the history of damage to the land, and whether the land was or could have been protected by a functioning levee or dike built to U. S. Army Corps of Engineers, NRCS, or comparable standards. Further, in making such determinations, information may be obtained and used from <PRTPAGE P="25"/>the Federal Emergency Management Agency or any other Federal, State (including State agencies or political subdivisions), or other entity or individual providing information regarding, for example, flood susceptibility for the land, soil surveys, aerial photographs, or flood plain data or other relevant information.</P> </SECTION> <SECTION> <SECTNO>§§ 701.6-701.9</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 701.10</SECTNO> <SUBJECT>Qualifying minimum cost of restoration.</SUBJECT> <P>(a) To qualify for assistance under § 701.3(a), the eligible damage must be so costly that Federal assistance is or will be required to return the land to productive agricultural use or to provide emergency water for livestock.</P> <P>(b) The Deputy Administrator shall establish the minimum qualifying cost of restoration. Each affected State may be allowed to establish a higher minimum qualifying cost of restoration.</P> <P>(c) A producer may request a waiver of the qualifying minimum cost of restoration. The waiver request shall document how failure to grant the waiver will result in environmental damage or hardship to the producer and how the waiver will accomplish the goals of the program. </P> <CITA>[69 FR 10302, Mar. 4, 2004; 69 FR 22377, Apr. 26, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 701.11</SECTNO> <SUBJECT>Prohibition on duplicate payments.</SUBJECT> <P>(a) <E T="03">Duplicate payments.</E> Participants are not eligible to receive funding under the ECP for land on which the participant has or will receive funding under:</P> <P>(1) The Wetland Reserve Program (WRP) provided for in 7 CFR part 1467;</P> <P>(2) The Emergency Wetland Reserve Program (EWRP) provided for in 7 CFR part 623;</P> <P>(3) The Emergency Watershed Protection Program (EWP) provided for in 7 CFR part 624; or</P> <P>(4) Any other program that covers the same or similar expenses so as to create duplicate payments, or, in effect, a higher rate of cost share than is allowed under this part.</P> <P>(b) <E T="03">Refund.</E> Participants who receive any duplicate funds, payments, or benefits shall refund any ECP payments received.</P> </SECTION> <SECTION> <SECTNO>§ 701.12</SECTNO> <SUBJECT>Eligible ECP practices.</SUBJECT> <P>(a) Cost-share assistance may be offered for ECP practices to replace or restore farmland, fences, or conservation structures to a condition similar to that existing before the natural disaster. No relief under this part shall be allowed to address conservation problems existing before the disaster.</P> <P>(b) The practice or practices made available when the ECP is implemented shall be only those practices authorized by FSA for which cost-share assistance is essential to permit accomplishment of the program goals.</P> <P>(c) Cost-share assistance may be provided for permanent vegetative cover, including establishment of the cover where needed, only in conjunction with eligible structures or installations where cover is needed to prevent erosion and/or siltation or to accomplish some other ECP purpose.</P> <P>(d) Practice specifications shall represent the minimum levels of performance needed to address the ECP need.</P> </SECTION> <SECTION> <SECTNO>§ 701.13</SECTNO> <SUBJECT>Submitting requests.</SUBJECT> <P>(a) Subject to the availability of funds, the Deputy Administrator shall provide for an enrollment period for submitting ECP cost-share requests.</P> <P>(b) Requests may be accepted after the announced enrollment period, if such acceptance is approved by the Deputy Administrator and is in accordance with the purposes of the program.</P> </SECTION> <SECTION> <SECTNO>§ 701.14</SECTNO> <SUBJECT>Onsite inspections.</SUBJECT> <P>An onsite inspection must be made before approval of any request for ECP assistance.</P> </SECTION> <SECTION> <SECTNO>§ 701.15</SECTNO> <SUBJECT>Starting practices before cost-share request is submitted; non-entitlement to payment; payment subject to the availability of funds.</SUBJECT> <P>(a) Subject to paragraphs (b) and (c) of this section, costs will not be shared for practices or components of practices that are started before a request for cost share under this part is submitted with the applicable county FSA office.<PRTPAGE P="26"/> </P> <P>(b) Costs may be shared for drought and non-drought ECP practices or components of practices that are started before a request is submitted with the county FSA office, only if:</P> <P>(1) Considered and approved on a case-by-case basis in accordance with instructions of the Deputy Administrator;</P> <P>(2) The disaster that is the basis of a claim for cost-share assistance created a situation that required the producer to take immediate action to prevent further losses;</P> <P>(3) The Deputy Administrator determines that the request for assistance was filed within a reasonable amount of time after the start of the enrollment period; and</P> <P>(4) The practice was started no more than 60 days before the ECP designation was approved for the applicable county office.</P> <P>(c) Any action taken prior to approval of a claim is taken at the producer's own risk.</P> <P>(d) An application for relief may be denied for any reason.</P> <P>(e) All payments under this part are subject to the availability of funds.</P> </SECTION> <SECTION> <SECTNO>§ 701.16</SECTNO> <SUBJECT>Practice approval.</SUBJECT> <P>(a) Requests shall be prioritized before approval based on factors deemed appropriate by FSA, which include, but are not limited to:</P> <P>(1) Type and degree of damage;</P> <P>(2) Type of practices needed to address the problem;</P> <P>(3) Availability of funds;</P> <P>(4) Availability of technical assistance;</P> <P>(5) Environmental concerns;</P> <P>(6) Safety factors; or</P> <P>(7) Welfare of eligible livestock.</P> <P>(b) Requests for cost-share assistance may be approved if:</P> <P>(1) Funds are available; and</P> <P>(2) The requested practice is determined eligible.</P> </SECTION> <SECTION> <SECTNO>§§ 701.17-701-20</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 701.21</SECTNO> <SUBJECT>Filing payment application.</SUBJECT> <P>Cost-share assistance is conditioned upon the availability of funds and the performance of the practice in compliance with all applicable specifications and program regulations.</P> <P>(a) <E T="03">Completion of practice.</E> After completion of the approved practice, the participant must certify completion and request payment by the payment request deadline. FSA will provide the participant with a form or another manner to be used to request payment.</P> <P>(b) <E T="03">Proof of completion.</E> Participants shall submit to FSA, at the local county office, the information needed to establish the extent of the performance of approved practices and compliance with applicable program provisions.</P> <P>(c) <E T="03">Payment request deadline.</E> The time limits for submission of information shall be determined by the Deputy Administrator. The payment request deadline for each ECP practice will be provided in the agreement after the application is approved. Time limits may be extended where failure to submit required information within the applicable time limits is due to reasons beyond the control of the participant.</P> </SECTION> <SECTION> <SECTNO>§ 701.22</SECTNO> <SUBJECT>Eligibility to file for cost-share assistance.</SUBJECT> <P>Any eligible participant, as defined in this part, who paid part of the cost of an approved practice may file an application for cost-share payment.</P> </SECTION> <SECTION> <SECTNO>§ 701.23</SECTNO> <SUBJECT>Eligible costs.</SUBJECT> <P>(a) Cost-share assistance may be authorized for all reasonable costs incurred in the completion of the practice, up to the maximums provided in §§ 701.26 and 701.27.</P> <P>(b) Eligible costs shall be limited as follows:</P> <P>(1) Costs for use of personal equipment shall be limited to those incurred beyond the normal operation of the farm or ranch.</P> <P>(2) Costs for personal labor shall be limited to personal labor not normally required in the operation of the farm or ranch.</P> <P>(3) Costs for the use of personal equipment and labor must be less than that charged for such equipment and labor by commercial contractors regularly employed in such areas.</P> <P>(4) Costs shall not exceed those needed to achieve the minimum performance necessary to resolve the problem being corrected by the practice. Any costs above those levels shall not be <PRTPAGE P="27"/>considered to be eligible costs for purposes of calculations made under this part.</P> <P>(c) Costs shall not exceed the practice specifications in § 701.12(d) for cost-share calculations.</P> <P>(d) The gross amount on which the cost-share eligibility may be computed will not include any costs that were reimbursed by a third party including, but not limited to, an insurance indemnity payment.</P> <P>(e) Total cost-share payments from all sources shall not exceed the total of eligible costs of the practice to the applicant.</P> </SECTION> <SECTION> <SECTNO>§ 701.24</SECTNO> <SUBJECT>Dividing cost-share among more than one participant.</SUBJECT> <P>(a) For qualifying cost-share assistance under this part, the cost shall be credited to the participant who personally performed the practice or who paid to have it performed by a third party. If a payment or credit was made by one participant to another potential participant, paragraph (c) of this section shall apply.</P> <P>(b) If more than one participant contributed to the performance of the practice, the cost-share assistance for the practice shall be divided among those eligible participants in the proportion they contributed to the performance of the practice. FSA may determine what proportion was contributed by each participant by considering the value of the labor, equipment, or material contributed by each participant and any other factors deemed relevant toward performance.</P> <P>(c) Allowance by a participant of a credit to another participant through adjustment in rent, cash or other consideration, may be considered as a cost of a practice to the paying party only if FSA determines that such credit is directly related to the practice. An applicant who was fully reimbursed shall be considered as not having contributed to the practice performance.</P> </SECTION> <SECTION> <SECTNO>§ 701.25</SECTNO> <SUBJECT>Practices carried out with aid from ineligible persons.</SUBJECT> <P>Any assistance provided by someone other than the eligible participant, including assistance from a State or Federal agency, shall be deducted from the participant's total costs incurred for the practice for the purpose of computing ECP cost shares. If unusual conditions exist, the Deputy Administrator may waive deduction of such contributions upon a request from the State committee and demonstration of the need for such a waiver.</P> </SECTION> <SECTION> <SECTNO>§ 701.26</SECTNO> <SUBJECT>Maximum cost-share percentage.</SUBJECT> <P>(a) In addition to other restrictions that may be applied by FSA, an ECP participant shall not receive more than 75 percent of the lesser of the participant's total actual cost or of the total allowable costs, as determined by this part, to perform the practice.</P> <P>(b) However, notwithstanding paragraph (a) of this section, a qualified limited resource producer that participates in the ECP may receive no more than 90 percent of the participant's actual cost to perform the practice or 90 percent of the total allowable costs for the practice as determined under this part.</P> <P>(c) In addition to other limitations that apply, in no case shall the ECP payment exceed 50 percent of what the Deputy Administrator has determined is the agricultural value of the affected land.</P> </SECTION> <SECTION> <SECTNO>§ 701.27</SECTNO> <SUBJECT>Maximum ECP payments per person.</SUBJECT> <P>A person, as defined in part 1400 of this title, is limited to a maximum cost-share of $200,000 per person, per disaster.</P> </SECTION> <SECTION> <SECTNO>§§ 701.28-701.30</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 701.31</SECTNO> <SUBJECT>Maintenance and proper use of practices.</SUBJECT> <P>(a) Each participant receiving cost-share assistance is responsible for the required maintenance and proper use of the practice. Some practices have an established life span or minimum period of time during which they are expected to function as a conservation practice with proper maintenance. Cost-share assistance shall not be authorized for normal upkeep or maintenance of any practice.</P> <P>(b) If a practice is not properly maintained for the established life span, the participant may be required to refund <PRTPAGE P="28"/>all or part of cost-share assistance received. The Deputy Administrator will determine what constitutes failure to maintain a practice and the amount that must be refunded.</P> </SECTION> <SECTION> <SECTNO>§ 701.32</SECTNO> <SUBJECT>Failure to comply with program provisions.</SUBJECT> <P>Costs may be shared for performance actually rendered even though the minimum requirements otherwise established for a practice have not been satisfied if a reasonable effort was made to satisfy the minimum requirements and if the practice, as performed, will adequately address the need for the practice.</P> </SECTION> <SECTION> <SECTNO>§ 701.33</SECTNO> <SUBJECT>Death, incompetency, or disappearance.</SUBJECT> <P>In case of death, incompetency, or disappearance of any participant, any cost-share payment due shall be paid to the successor, as determined in accordance with part 707 of this chapter.</P> </SECTION> <SECTION> <SECTNO>§ 701.34</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>Part 11 of this title and part 780 of this chapter apply to determinations made under this part.</P> </SECTION> <SECTION> <SECTNO>§ 701.35</SECTNO> <SUBJECT>Compliance with regulatory measures.</SUBJECT> <P>Participants who perform practices shall be responsible for obtaining the authorities, permits, rights, easements, or other approvals necessary to the performance and maintenance of the practices according to applicable laws and regulations. The ECP participant shall be wholly responsible for any actions taken with respect to the project and shall, in addition, be responsible for returning and refunding any ECP cost shares made, where the purpose of the project cannot be accomplished because of the applicants' lack of clearances or other problems.</P> </SECTION> <SECTION> <SECTNO>§ 701.36</SECTNO> <SUBJECT>Schemes and devices and claims avoidances.</SUBJECT> <P>(a) If FSA determines that a participant has taken any action designed to defeat, or has the effect of defeating, the purposes of this program, the participant shall be required to refund all or part of any of the program payments otherwise due or paid that participant or related person for that particular disaster. These actions include, but are not limited to, failure to properly maintain or deliberately destroying a practice and providing false or misleading information related to practices, costs, or arrangements between entities or individuals that would have an effect on “person” determinations made under this part.</P> <P>(b) All or any part of cost-share assistance that otherwise would be due any participant may be withheld, or required to be refunded, if the participant has adopted, or participated in, any scheme or device designed to evade the maximum cost-share limitation that applies to the ECP or to evade any other requirement or provision of the program or this part.</P> <P>(c) If FSA determines that a participant has employed any scheme or device to deprive any other person of cost-share assistance, or engaged in any actions to receive payments under this part that also were designed to avoid claims of the United States or its instrumentalities or agents against that party, related parties, or third parties, the participant shall refund all or part of any of those program payments paid to that participant for the project.</P> <P>(d) For purposes of this section, a scheme or device can include, but is not limited to, instances of coercion, fraud, or misrepresentation regarding the claim for ECP assistance and the facts and circumstances surrounding such claim.</P> <P>(e) A participant who has knowingly supplied false information or filed a false claim shall be ineligible for cost-share assistance related to the disaster for which the false information was filed, or for any period of time FSA deems appropriate. False information or a false claim includes, but is not limited to, a request for payment for a practice not carried out, a false billing, or a billing for practices that do not meet required specifications.</P> </SECTION> <SECTION> <SECTNO>§ 701.37</SECTNO> <SUBJECT>Loss of control of the property during the practice life span.</SUBJECT> <P>In the event of voluntary or involuntary loss of control of the land by the ECP cost-share recipient during the <PRTPAGE P="29"/>practice life-span, if the person acquiring control elects not to become a successor to the ECP agreement and the practice is not maintained, each participant who received cost-share assistance for the practice may be jointly and severally liable for refunding any ECP cost-share assistance related to that practice. The practice life span, for purposes of this section, includes any maintenance period that is essential to its success.</P> </SECTION> <SECTION> <SECTNO>§§ 701.38-701.40</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 701.41</SECTNO> <SUBJECT>Cost-share assistance not subject to claims.</SUBJECT> <P>Any cost-share assistance or portion thereof due any participant under this part shall be allowed without regard to questions of title under State law, and without regard to any claim or lien against any crop or property, or proceeds thereof, except liens and other claims of the United States or its instrumentalities. The regulations governing offsets and withholdings at parts 792 and 1403 of this title shall be applicable to this program and the provisions most favorable to a collection of the debt shall control.</P> </SECTION> <SECTION> <SECTNO>§ 701.42</SECTNO> <SUBJECT>Assignments.</SUBJECT> <P>Participants may assign ECP cost-share assistance payments, in whole or in part, according to part 1404 of this title.</P> </SECTION> <SECTION> <SECTNO>§ 701.43</SECTNO> <SUBJECT>Information collection requirements.</SUBJECT> <P>Information collection requirements contained in this part have been approved by the Office of Management and Budget under the provisions at 44 U.S.C. Chapter 35 and have been assigned OMB Number 0560-0082.</P> </SECTION> <SECTION> <SECTNO>§ 701.44</SECTNO> <SUBJECT>Agricultural Conservation Program (ACP) contracts.</SUBJECT> <P>Contracts for ACP that are, or were, administered under this part or similar contracts executed in connection with the Interim Environmental Quality Incentives Program, shall, unless the Deputy Administrator determines otherwise, be administered under, and be subject to, the regulations for ACP contracts and the ACP program that were contained in the 7 CFR, parts 700 to 899, edition revised as of January 1, 1998, and under the terms of the agreements that were entered into with participants.</P> </SECTION> <SECTION> <SECTNO>§ 701.45</SECTNO> <SUBJECT>Forestry Incentives Program (FIP) contracts.</SUBJECT> <P>The regulations governing the FIP as of July 31, 2002, and contained in the 7 CFR, parts 700 to 899, edition revised as of January 1, 2002, shall continue to apply to FIP contracts in effect as of that date, except as provided in accord with a delegation of the administration of that program and such delegation and actions taken thereunder shall apply to any other FIP matters as may be at issue or in dispute.</P> </SECTION> </PART> <PART> <EAR>Pt. 702</EAR> <HD SOURCE="HED">PART 702—COLORADO RIVER BASIN SALINITY (CRSC) CONTROL PROGRAM</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>702.1</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>702.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>702.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>702.4</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>702.5</SECTNO> <SUBJECT>Eligible land.</SUBJECT> <SECTNO>702.6</SECTNO> <SUBJECT>Eligible entity.</SUBJECT> <SECTNO>702.7</SECTNO> <SUBJECT>Salinity control plan.</SUBJECT> <SECTNO>702.8</SECTNO> <SUBJECT>Eligible salinity reduction practices (SRP's).</SUBJECT> <SECTNO>702.9</SECTNO> <SUBJECT>CRSC Contract and obligations of the participant.</SUBJECT> <SECTNO>702.10</SECTNO> <SUBJECT>Operation and maintenance agreements.</SUBJECT> <SECTNO>702.11</SECTNO> <SUBJECT>Obligations of USDA.</SUBJECT> <SECTNO>702.12</SECTNO> <SUBJECT>Availability of cost-share payments.</SUBJECT> <SECTNO>702.13</SECTNO> <SUBJECT>Levels and rates of cost-share payments.</SUBJECT> <SECTNO>702.14</SECTNO> <SUBJECT>Assignments.</SUBJECT> <SECTNO>702.15</SECTNO> <SUBJECT>Payments not subject to claims.</SUBJECT> <SECTNO>702.16</SECTNO> <SUBJECT>Maximum amount of cost-share payments.</SUBJECT> <SECTNO>702.17</SECTNO> <SUBJECT>Transfers of land and contract modifications.</SUBJECT> <SECTNO>702.18</SECTNO> <SUBJECT>Violations.</SUBJECT> <SECTNO>702.19</SECTNO> <SUBJECT>CRSC Contracts and operation and maintenance agreements not in conformity with regulations.</SUBJECT> <SECTNO>702.20</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>702.21</SECTNO> <SUBJECT>Access to land.</SUBJECT> <SECTNO>702.22</SECTNO> <SUBJECT>Performance based upon advice or action of representatives of the Department or a CD.</SUBJECT> <SECTNO>702.23</SECTNO> <SUBJECT>Filing of false claims.</SUBJECT> <SECTNO>702.24</SECTNO> <SUBJECT>Depriving others of payments.</SUBJECT> <SECTNO>702.25</SECTNO> <SUBJECT>Miscellaneous.</SUBJECT> <SECTNO>702.26</SECTNO> <SUBJECT>Paperwork Reduction Act assigned numbers.</SUBJECT> </CONTENTS> <AUTH> <PRTPAGE P="30"/> <HD SOURCE="HED">Authority:</HD> <P>Sec. 201, Pub. L. 93-320, 88 Stat. 271; Sec. 2, Pub. L. 98-569, 98 Stat. 2933 (43 U.S.C. 1592(c)).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>52 FR 16741, May 5, 1987, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 702.1</SECTNO> <SUBJECT>General.</SUBJECT> <P>The regulations in this part set forth the terms and conditions of the Colorado River Salinity Control (CRSC) Program authorized by section 202 of the Colorado River Basin Salinity Control Act, as amended (43 U.S.C. 1592) (the Act). Under the Act the Secretary is authorized to:</P> <P>(a) Identify salt-source areas in the Colorado River Basin;</P> <P>(b) Develop plans for implementing conservation measures that will reduce the salt load in the Colorado River, including the voluntary replacement of incidental fish and wildlife values foregone;</P> <P>(c) Share the cost of establishing such conservation measures and practices;</P> <P>(d) Provide technical assistance;</P> <P>(e) Monitor and evaluate changes in salt contributions to the Colorado River; and</P> <P>(f) Carry out related research, demonstration and education activities.</P> </SECTION> <SECTION> <SECTNO>§ 702.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) The following definitions shall be applicable for the purposes of this part:</P> <P>(1) <E T="03">Applicant</E> means an entity who has offered to enter into a CRSC Contract in accordance with the provisions of this part;</P> <P>(2) <E T="03">Actual cost</E> means the direct costs of establishing a salinity reduction practice, and includes the cost of labor, supplies, and other necessary activities;</P> <P>(3) <E T="03">Average cost</E> means the cost, determined by averaging actual costs and current cost estimates, considered to be necessary for a participant to carry out a salinity reduction practice, a designated component of a salinity reduction practice, or a system of practices;</P> <P>(4) <E T="03">Conservation District</E> (CD) means a subdivision of a State organized pursuant to applicable State law. The term includes bodies variously known in the States as conservation district, soil conservation district, soil and water conservation district, natural resource district, resource conservation district, or natural resource conservation district;</P> <P>(5) <E T="03">Components</E> means measurable units of a salinity reduction practice which, when completed by the program participant, can be certified by the Soil Conservation Service (SCS) as reasonable, identifiable progress toward completion of the practice with respect to which cost-share payment is being made under the CRSC program;</P> <P>(6) <E T="03">Conservation treatment</E> means the combination of salinity reduction practices that will provide the salinity control treatment required to reduce seepage and improve irrigation water management in order to achieve the projected salt load reductions indicated in the applicable published USDA Salinity Control Report. Such treatment may include replacement of incidental fish and wildlife values foregone as a result of salinity control treatment applied by the participant under the CRSC program.</P> <P>(7) <E T="03">CRSC Contract</E> means the contract including the salinity control plan, entered into in writing between the local Agricultural Stabilization and Conservation Committee (COC) and the participant which sets forth the terms and conditions for participation in the CRSC Program established in accordance with this part.</P> <P>(8) <E T="03">Cost-effective</E> means maximization of the CRSC Program on-farm and offsite benefits at the least Federal cost per unit of salinity reduction.</P> <P>(9) <E T="03">Cost-share assistance</E> means the providing of financial resources to assist program participants in establishing conservation treatment identified in participants' contracts;</P> <P>(10) <E T="03">Cost-share rate</E> means a fixed amount of cost-share funds paid per unit for carrying out certain salinity reduction practices.</P> <P>(11) <E T="03">Deputy Administrator</E> means the FSA Deputy Administrator for State and County Operations, or designee.</P> <P>(12) <E T="03">Entity</E> means an individual or group of individuals, Indian tribe, partnership, firm, joint-stock company, corporation, association, trust, estate, irrigation district/company, or other <PRTPAGE P="31"/>public or nonpublic entity (except federal agencies), and wherever applicable, a State, a political subdivision of a State, or any agency thereof;</P> <P>(13) <E T="03">Fish and wildlife values foregone</E> means incidental fish and wildlife habitats that may be affected adversely by salinity reduction practices applied by the program participant;</P> <P>(14) <E T="03">Irrigation district/company</E> means a group of individuals (private or public) associated together in a locality, that has a vested interested in the operation of an irrigation distribution system that serve as a specific area. This definition includes irrigation districts, mutual water companies or districts, water conservancy districts, canal companies, and other similar entities;</P> <P>(15) <E T="03">Lifespan</E> means the period of time during which a salinity reduction practice is expected to effectively achieve or provide the results for which it was developed and implemented.</P> <P>(16) <E T="03">Offsite benefits</E> means those benefits which accrue downstream as a result of reduced salinity concentrations in the Colorado River by the salt load reductions achieved through implementation of the CRSC Program and/or its constituent practices and treatments;</P> <P>(17) <E T="03">On-farm benefits</E> means those benefits which accrue on a farm from improved irrigation systems and efficiencies, including reduced production costs, reduced labor costs, reduced operation and maintenance costs, and improved crop yields;</P> <P>(18) <E T="03">Operation and Maintenance Agreement</E> means the agreement entered into between the COC and the participant which sets forth the terms and conditions requiring the participant to use and maintain the salinity reduction practices for their effective lifespans as set forth in the agreement;</P> <P>(19) <E T="03">Participant</E> means any entity who has entered into an approved CRSC Contract with the COC to participate in the CRSC Program;</P> <P>(20) <E T="03">Project implementation plan</E> means a plan of operations developed by Farm Service Agency, Extension Service and Soil Conservation Service, in consultation with local officials for the purpose of implementing a project plan for a specific salt source area;</P> <P>(21) <E T="03">Project plan</E> means that plan of conservation treatment that is identified in the applicable USDA Salinity Control Report as the preferred plan for implementation of salinity reduction practices in a specific salt source area. The project plan will identify cost-effective salinity reduction practices, the land which should receive conservation treatment on a priority basis in relation to other land in the specific salt source area, and the levels of conservation treatment needed in the specific salt source area in order to achieve the most cost-effective salinity control objectives for the particular area to be achieved;</P> <P>(22) <E T="03">Salinity control plan</E> means the plan and schedule of operations that sets forth salinity reduction practices that must be establish on a specific unit of land. The salinity control plan shall be developed by the applicant with assistance from the SCS and must be approved by the CD;</P> <P>(23) <E T="03">Salinity Reduction Practice (SRP)</E> means a specific conservation practice designed to reduce salt loading from a salt source area or to replace incidental fish and wildlife values foregone that is identified in a project plan and project implementation plan for a salt-source area;</P> <P>(24) <E T="03">Salt-source area</E> means a geographical area within the Colorado River Basin that has been identified by SCS as a significant contributing source of salt to the Colorado River;</P> <P>(25) <E T="03">Specifications</E> means minimum quantity and quality requirements established by SCS to meet the standard for a specific conservation practice;</P> <P>(26) <E T="03">State Conservationist</E> means the SCS official in charge of agency operations within a state, as set forth in part 600 of this chapter;</P> <P>(27) <E T="03">Technical assistance</E> means use of personnel and financial resources to identify salt-source areas, develop project plans, prepare salinity control plans, contracts, and designs, supervise plan installation, and carry out research, demonstration, education, monitoring, and evaluation activities;</P> <P>(28) <E T="03">USDA Salinity Control Report</E> means a report that identifies salt source areas in the Colorado River Basin and establishes a cost-effective project plan for such areas designed to <PRTPAGE P="32"/>reduce the salinity levels in the Colorado River. The USDA Salinity Control Report is prepared and published by the Soil Conservation Service with provision for public comment;</P> <P>(29) <E T="03">Technical guide</E> means a document on file in the local SCS office containing technical information and specifications for the conservation of soil, water, plant, animal, and related natural resources specifically applicable to the area for which it is prepared.</P> <P>(b) In the regulations in this part and in all instructions, forms, and documents in connection therewith, all other words and phrases shall, unless the context of subject matter otherwise requires, have the meanings assigned to them in the regulations governing reconstitutions of farms, allotments and bases, 7 CFR part 719.</P> <CITA>[52 FR 16741, May 5, 1987, as amended at 58 FR 11785, Mar. 1, 1993]</CITA> </SECTION> <SECTION> <SECTNO>§ 702.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) <E T="03">Farm Service Agency.</E> (1) The Farm Service Agency (FSA), under the general supervision of the Administrator, FSA, shall administer the program established by this part. This program shall be carried out in the field by State ASC committees (STC) and local county ASC committees (COC).</P> <P>(2) Except as provided in paragraph (b) of this section, the Deputy Administrator, State and County Operations, FSA (Deputy Administrator), may determine any question arising under the program provided for in this part, may reverse or modify any determination made by an STC or COC in connection with this program, and may administer any and all phases of this program delegated to the COC, STC, or any employee(s) where the COC, STC, or any employee fails to perform a function required in these regulations. In exercising this authority, the Deputy Administrator may authorize a person or persons to carry out this program for such period of time as is deemed necessary.</P> <P>(b) <E T="03">Soil Conservation Service.</E> (1) The Soil Conservation Service (SCS) shall:</P> <P>(i) Identify salt source areas in the Colorado River Basin;</P> <P>(ii) Develop USDA Salinity Control Reports;</P> <P>(iii) Assist participants in developing salinity control plans; and</P> <P>(iv) Provide such other technical assistance in the implementation of the CRSC Program as is determined to be necessary.</P> <P>(2) The Chief, SCS, may determine any question arising under the CRSC Program with respect to the activities of SCS, State Conservationists, and conservation districts.</P> <P>(3) In developing the USDA Salinity Control Report and implementing the project plan, SCS shall coordinate with other agencies of the U.S. Department of Agriculture, the United States Department of the Interior, and the Environmental Protection Agency.</P> <P>(c) The Extension Service (ES) shall develop and coordinate information and educational programs and may provide other technical support to carry out the program provided for by this part.</P> <P>(d) Other USDA agencies such as Cooperative State Research Service (CSRS) and the Agricultural Research Service (ARS) may conduct research and may provide other technical support needed to carry out the CRSC Program.</P> </SECTION> <SECTION> <SECTNO>§ 702.4</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>(a) The provision of this part shall be applicable to areas within the Colorado River Basin that have been identified by SCS as salt source areas.</P> <P>(b) The program provided for by this part shall be applicable to private lands, Indian tribal lands, lands owned or controlled by irrigation districts or companies, Federal land under the control of the USDA, and State and local government lands.</P> </SECTION> <SECTION> <SECTNO>§ 702.5</SECTNO> <SUBJECT>Eligible land.</SUBJECT> <P>For the purposes of this part, eligible land is land that is within the Colorado River Basin area which:</P> <P>(a) Has been identified by SCS as a salt source area;</P> <P>(b) Is the subject of a published USDA Salinity Control Report and an approved project implementation plan;</P> <P>(c) Has been irrigated at least two years during the period between 1982 and 1986, inclusive; and</P> <P>(d) Notwithstanding the criteria articulated in paragraphs (a) through (c) <PRTPAGE P="33"/>of this section, the Deputy Administrator has final authority to approve land for CRSC program eligibility if one of the following conditions is satisfied:</P> <P>(1) If it is determined impossible to reorganize the existing irrigation system to increase irrigation efficiencies to obtain salt load reduction, irrigated land may be exchanged for nonirrigated land.</P> <P>(2) Nonirrigated wildlife areas devoted to replacing incidental fish and wildlife values foregone because of the CRSC program.</P> <P>(3) Incidental land, which in the course of improving or reorganizing the existing irrigation system, becomes irrigable.</P> <CITA>[52 FR 16741, May 5, 1987, as amended at 58 FR 11785, Mar. 1, 1993]</CITA> </SECTION> <SECTION> <SECTNO>§ 702.6</SECTNO> <SUBJECT>Eligible entity.</SUBJECT> <P>In order to be eligible to enter into a CRSC Contract, an entity must own or have control over eligible land.</P> </SECTION> <SECTION> <SECTNO>§ 702.7</SECTNO> <SUBJECT>Salinity control plan.</SUBJECT> <P>(a) The applicant, in consultation with SCS, shall develop the salinity control plan which is the most cost-effective consistent with the project plan.</P> <P>(b) All salinity control plans must be approved by the CD in order for the SRP's contained therein to be eligible for cost-share assistance.</P> <P>(c) When approving salinity control plans, the CD shall ensure that the salinity control plan is consistent with the approved project plan and cost-effective SRP's identified in the approved project implementation plan for the area.</P> </SECTION> <SECTION> <SECTNO>§ 702.8</SECTNO> <SUBJECT>Eligible salinity reduction practices (SRP's).</SUBJECT> <P>(a) Eligible SRP's are those practices specified in the project implementation plan and the participant's salinity control plan that:</P> <P>(1) Significantly reduce the salt loading from a unit of land; or</P> <P>(2) Replace incidental fish and wildlife values foregone; or</P> <P>(3) Reduce erosion or seepage to a degree which significantly benefits salinity control.</P> <P>(b) Notwithstanding the foregoing provisions of this section, the following practices shall not be considered to be eligible SRP's:</P> <P>(1) Practices installed primarily for the purpose of bringing additional land into production, for increasing production above that which is incidental to application of conservation treatment for salinity control, or for flood protection; and</P> <P>(2) Practices which are installed or commenced before the contract for cost-share assistance has been approved.</P> </SECTION> <SECTION> <SECTNO>§ 702.9</SECTNO> <SUBJECT>CRSC Contract and obligations of the participant.</SUBJECT> <P>(a) In order to receive cost-share assistance in accordance with this part, an eligible entity must enter into a CRSC Contract with a COC and, if required by the COC, enter into separate operation and maintenance agreements in accordance with § 702.10 of this part.</P> <P>(b) The CRSC Contract will be comprised of:</P> <P>(1) The terms and conditions of the contract; and</P> <P>(2) The salinity control plan.</P> <P>(c) All CRSC Contracts shall have a term of not less than 3 nor more than 10 years.</P> <P>(d) Eligible entities may offer to enter into a CRSC Contract in accordance with this part through the COC located in the same county as the eligible land or such other COC designated to administer contracts in the project area.</P> <P>(e) By entering into a CRSC Contract, the participant agrees to:</P> <P>(1) Carry out the terms and conditions of the CRSC Contract;</P> <P>(2) Implement the salinity control plan:</P> <P>(i) In accordance with the schedule of completion dates included in such plan, unless an extension of time is granted by the COC in consultation with the CD; and</P> <P>(ii) Install all SRP's included in the salinity control plan in accordance with the SCS field office technical guide, regardless of whether the applicant receives cost-share assistance with respect to a SRP;</P> <P>(3) Acquire all authorities, rights, easements, permits or other approvals <PRTPAGE P="34"/>necessary to install and maintain the SRP's and for compliance with applicable Federal, State, and local laws and regulations;</P> <P>(4) Hold the Federal government harmless for any losses it may sustain if the participant infringes on the rights of others or fails to comply with applicable Federal, State, or local laws or regulations;</P> <P>(5) Operate and maintain, at no cost to the Federal government, the SRP's as specified in the salinity control plan and ACP-245, Practice Approval and Payment Application, or as specified in separate operation and maintenance agreements entered into by the participant for the effective lifespan of the SRP's, as determined by SCS; and</P> <P>(6) Not undertake any action on the land subject to the CRSC Contract that tends to defeat the purposes of the program provided for by this part.</P> <P>(f) All entities who have a present possessory interest in the land, to be eligible for CRSC cost share, must sign a CRSC contract.</P> <P>(g) The participant and each entity signing the CRSC Contract shall be jointly and severally responsible for compliance with the contract and the provisions of this part and for any refunds or payments which may be required for violation of any of the terms and conditions of the CRSC Contract and the provisions of this part.</P> <P>(h) The CRSC contract may require that all participants and/or landowners, as a condition of eligibility for cost-share assistance, grant to the Secretary a recordable security interest in the property or equipment of the SRP's that are installed, with the value of the granted interest to be determined by FSA.</P> <P>(i) The Deputy Administrator, or the Deputy Administrator's designee, may, in consultation with SCS and the CD, accept or reject offers to enter into a CRSC Contract.</P> <P>(j) CRSC Contracts shall be implemented, and salinity control plans shall be developed, in the order of priority within the applicable salt source area that is established by the COC and CD in consultation with SCS.</P> <CITA>[52 FR 16741, May 5, 1987, as amended at 58 FR 11785, Mar. 1, 1993]</CITA> </SECTION> <SECTION> <SECTNO>§ 702.10</SECTNO> <SUBJECT>Operation and maintenance agreements.</SUBJECT> <P>(a) The participant shall enter into with the COC any operation and maintenance agreements determined to be necessary by the COC in order to ensure proper operation and maintenance of the SRP's provided for in the CRSC Contract.</P> <P>(b) The operation and maintenance agreement will be comprised of:</P> <P>(1) The terms and conditions of the agreement; and</P> <P>(2) An operation and maintenance plan prepared by SCS.</P> <P>(c) By entering in an operation and maintenance agreement, the participant agrees to:</P> <P>(1) Carry out the terms and conditions of the operation and maintenance agreement;</P> <P>(2) Operate and maintain, at no cost to the Federal government, the SRP's for the effective lifespan of all SRP's included in the operation and maintenance agreement;</P> <P>(3) Operate, maintain and inspect the SRP's in accordance with the operation and maintenance plan;</P> <P>(4) Obtain prior COC and SCS approval of all plans, designs, and specifications for any alteration to the SRP's;</P> <P>(5) Prohibit the installation of any structure or facility that will interfere with the operation and maintenance of the SRP's;</P> <P>(6) Notify the COC and SCS of any agreement to be entered into with other parties for the operation and maintenance of all or part of SRP's and provide the COC and SCS with a copy of such agreement when it has been signed by the participant and the other party; and</P> <P>(7) Not undertake any action on the land subject to the operation and maintenance agreement that tends to defeat the purposes of the CRSC program;</P> <P>(d) The participant and each person signing the operation and maintenance agreement shall be jointly and severally responsible for compliance with the operation and maintenance agreement and the provisions of this part and for any refunds or payment adjustments that may be required for violation of any of the terms and conditions <PRTPAGE P="35"/>of the operation and maintenance agreement and provisions of this part.</P> </SECTION> <SECTION> <SECTNO>§ 702.11</SECTNO> <SUBJECT>Obligations of USDA.</SUBJECT> <P>FSA shall, subject to the availability of funds, share the cost with participants of establishing eligible SRP's specified in the salinity control plan at the levels and rates of cost-sharing determined in accordance with the provisions of § 702.13 and SCS shall provide such technical assistance as may be necessary to assist the participant in carrying out the CRSC Contract.</P> </SECTION> <SECTION> <SECTNO>§ 702.12</SECTNO> <SUBJECT>Availability of cost-share payments.</SUBJECT> <P>(a) Cost-share payments shall be made available to a participant in a CRSC Contract upon a determination by the COC that SCS has certified that the eligible SRP or an identifiable portion thereof has been established in accordance with the appropriate standards and specifications and that such SRP would serve the functional purposes for which the practice is intended.</P> <P>(b) Cost-share payments may be made available under this part only for the establishment or installation of an eligible SRP.</P> <P>(c) Cost-share assistance may be approved for the replacement, enlargement, or restoration of SRP's installed under a CRSC Contract if such practices, as originally installed, failed to achieve the desired salinity reduction and if:</P> <P>(1) The replacement, enlargement, or restoration of the SRP is required to solve identified problems or to achieve salt reduction benefits;</P> <P>(2) The approved specifications for the SRP were met in the original installation of the practice; and</P> <P>(3) The failure of the SRP to solve the identified problem or to achieve salt reduction benefits was caused by circumstances beyond the control of the participant.</P> <P>(d) If a participant has taken any action which tends to defeat the purposes of the program provided for by this part, the COC may withhold or require a refund of all or part of any payments otherwise due or paid that participant in accordance with this part. Such actions include, but are not limited to, failure to properly maintain or deliberately destroying a SRP.</P> </SECTION> <SECTION> <SECTNO>§ 702.13</SECTNO> <SUBJECT>Levels and rates of cost-share payments.</SUBJECT> <P>(a) The level of Federal cost-share assistance for the required SRP's for the project shall be determined by formulas as established in the USDA Salinity Control Report.</P> <P>(b) Except as provided in paragraph (c) of this section, cost-share payments shall not exceed the lesser of 70 percent of the average cost or 70 percent of the actual cost of the installation of the SRP.</P> <P>(c) The Deputy Administrator, in consultation with the USDA Salinity Control Coordinating Committee, may approve cost-share levels in excess of 70 percent of the average or actual cost of installation of the SRP or in excess of the level based on the ratio of on-farm and offsite benefits if such increased assistance is necessary to obtain acceptable program participation. Higher cost-share levels shall be considered only when one or more of the following apply, unless the Secretary finds at his descretion that such cost-sharing requirement would result in a failure to proceed with needed on-farm measures:</P> <P>(1) On-farm benefits that are low relative to offsite benefits;</P> <P>(2) Higher degree of project cost-effectiveness and magnitude of salinity reduction benefits to be achieved relative to other projects;</P> <P>(3) The need for and the cost of implementing voluntary SRP's to replace incidental fish and wildlife values foregone;</P> <P>(d) The combined cost-share assistance provided by Federal, State, and local governments or subdivisions thereof shall not exceed 100 percent of the cost of installing the SRP.</P> <CITA>[52 FR 16741, May 5, 1987, as amended at 58 FR 11786, Mar. 1, 1993]</CITA> </SECTION> <SECTION> <SECTNO>§ 702.14</SECTNO> <SUBJECT>Assignments.</SUBJECT> <P>Any participant entitled to cost-share payments under this program may assign the right to receive such payment, in whole or in part, as provided in the regulations at 7 CFR part 709, Assignment of Payment, or as provided in instructions issued by the Deputy Administrator.</P> </SECTION> <SECTION> <PRTPAGE P="36"/> <SECTNO>§ 702.15</SECTNO> <SUBJECT>Payments not subject to claims.</SUBJECT> <P>Subject to the regulations found at 7 CFR part 13, any cost-share payment or portion thereof due any entity shall be allowed without regard to questions of title under State law, and without regard to any claim or lien against the practice in favor of the owner or any other creditor, except agencies of the United States Government.</P> </SECTION> <SECTION> <SECTNO>§ 702.16</SECTNO> <SUBJECT>Maximum amount of cost-share payments.</SUBJECT> <P>(a) Maximum payments for on-farm SRP's.</P> <P>(1) Except as provided in paragraph (a)(2) of this section, the maximum amount of cost-share payments that a COC may approve for the establishment of on-farm SRP's on all land owned or controlled by a participant for the life of the program provided for by this part shall not exceed $100,000.</P> <P>(2) The Deputy Administrator may approve cost-share payments to a participant for the establishment of on-farm SRP's in excess of $100,000.</P> <P>(b) Except as provided in paragraphs (b)(1) and (b)(2) of this section, the maximum program cost-share payment that a COC may approve for implementing required SRP's for installing and improving canals and laterals on all land owned and controlled by a participant for the life of the program shall not exceed $200,000.</P> <P>(1) Upon the request of the COC, the STC may authorize the COC to approve cost-share payments to a participant for the establishment of canal and lateral improvements in an amount that exceeds, $200,000 but not greater than $400,000.</P> <P>(2) Upon the request of the COC, the Deputy Administrator may authorize the COC to approve cost-share payments to a participant for the establishment of canal and laterals improvements in amounts exceeding $400,000.</P> <P>(c) Cost-sharing payments in excess of $100,000 shall be considered only when such payment will result in greater total offsite benefits, because the offsite benefits for the participants SCP, are greater than those of other participants under consideration at the same time and one or more of the following conditions exist:</P> <P>(1) The cost of establishing required SRP's on the participant's land is high relative to the cost of installing practices on other similar land because of barriers or limitations imposed by nature or by man through past irrigation system practices;</P> <P>(2) The extent of SRP's that must be established on a participant's land; and</P> <P>(3) Increases in the cost of conservation materials and services that are beyond the participant's control.</P> </SECTION> <SECTION> <SECTNO>§ 702.17</SECTNO> <SUBJECT>Transfers of land and contract modifications.</SUBJECT> <P>(a) CRSC Contracts may be transferrred or modified with the agreement of all parties to the contract. The transferee shall assume full responsibility for performance under the CRSC Contract, including the implementation of scheduled SRP's and the operation and maintenance of existing and scheduled SRP's.</P> <P>(b) A participant who sells or loses control of the land under a CRSC Contract or any related operation and maintenance agreement to a new owner who refuses to perform the provisions of the CRSC Contract or operation and maintenance agreement or a participant who sells the water rights before there is compliance with all of the terms and conditions of a CRSC Contract or operation and maintenance agreement may be required to refund all or a portion of the cost-share assistance earned under the program.</P> </SECTION> <SECTION> <SECTNO>§ 702.18</SECTNO> <SUBJECT>Violations.</SUBJECT> <P>(a)(1) If a participant violates the CRSC Contract or any related operations and maintenance agreement, the COC may, after considering the recommendations of the CD and SCS, terminate the CRSC Contract and operation and maintenance agreement.</P> <P>(2) If the CRSC Contract is terminated by the COC in accordance with this section, the participant shall forfeit all rights to further cost-share payments under the CRSC Contract and shall refund all or part of the payments received as determined by the COC.</P> <P>(b) The following actions constitute a violation of the CRSC Contract or any related operation and maintenance agreement by a participant:<PRTPAGE P="37"/> </P> <P>(1) Destruction of a SRP on land which is the subject of a CRSC Contract, unless prior approval in writing is granted by FSA with SCS concurrence;</P> <P>(2) Failure to comply with the terms and conditions of the CRSC Contract and any related operation and maintenance agreements;</P> <P>(3) Filing of a false claim;</P> <P>(4) Undertaking any action during the CRSC Contract or any operation and maintenance agreement period that tends to defeat the purpose of the program, including the destruction of any existing conservation practices that were established under any other cost-share program unless the participant provides evidence that all of the participant's obligations under such other program have been met; or</P> <P>(5) Employment of any scheme or device to obtain cost-share assistance or additional cost-share assistance, or to deprive any other land user of cost-share assistance or the right to participate in the program.</P> <P>(c) The Deputy Administrator may terminate any CRSC Contract and any related operation and maintenance agreements by mutual agreement with the paticipant based upon recommendations from COC, STC, SCS, and CD, if the termination of the CRSC Contract and operation and maintenance agreement is determined to be in the best interest of the public.</P> <P>(d) If the participant fails to perform the terms and conditions of the CRSC contract and the Deputy Administrator determines, after considering the recommendations of the CD and SCS, that such failure does not warrant termination of the CRSC contract, the Deputy Administrator may require such participant to refund all or part of the payments received under the CRSC contract, or to accept such adjustments in the payment as are determined to be appropriate by the Deputy Administrator.</P> <CITA>[52 FR 16741, May 5, 1987, as amended at 58 FR 11786, Mar. 1, 1993]</CITA> </SECTION> <SECTION> <SECTNO>§ 702.19</SECTNO> <SUBJECT>CRSC Contracts and operation and maintenance agreements not in conformity with regulations.</SUBJECT> <P>If, after a CRSC Contract and related operation and maintenance agreement are entered in by the COC with a participant, it is discovered that such contract and operation and maintenance agreement are not in conformity with the provisions of this part as the result of a misunderstanding of the program procedures by a signatory to the contract and operation and maintenance agreement, a modification of the contract and operation and maintenance agreement may be made by mutual agreement. If the parties to the CRSC Contract and operation and maintenance agreement cannot reach agreement with respect to such modification, the contract and operation and maintenance agreement shall be terminated and all payments paid or payable under the contract shall be forfeited or refunded to the Federal government, except as may otherwise be allowed in accordance with the provisions of § 702.18 of this part.</P> </SECTION> <SECTION> <SECTNO>§ 702.20</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>The participant may obtain a review, in accordance with the provisions of 7 CFR part 614 and 7 CFR part 11, of any administrative decision made under the provisions of this part.</P> <CITA>[60 FR 67316, Dec. 29, 1995]</CITA> </SECTION> <SECTION> <SECTNO>§ 702.21</SECTNO> <SUBJECT>Access to land.</SUBJECT> <P>The COC, SCS or other agency providing technical services or representatives thereof shall have the right of access to land for which application to enter into a CRSC Contract has been made or for which a CRSC Contract has been entered into and the right to examine any program records to ascertain the accuracy of any representation made in the application or to determine compliance with the contract.</P> </SECTION> <SECTION> <SECTNO>§ 702.22</SECTNO> <SUBJECT>Performance based upon advice or action of representatives of the Department or a CD.</SUBJECT> <P>Notwithstanding any other provision of law, performance rendered in good faith in reliance upon the action or advice of any authorized representative of a CD, a representative of SCS or the STC or COC may be accepted by the Chief of SCS or the Deputy Administrator, as applicable, as meeting the requirements of this program. SCS or the Deputy Administrator, respectively, may grant relief because of such good <PRTPAGE P="38"/>faith reliance to the extent it is deemed necessary to provide fair and equitable treatment.</P> </SECTION> <SECTION> <SECTNO>§ 702.23</SECTNO> <SUBJECT>Filing of false claims.</SUBJECT> <P>(a) If it is determined by the COC, with STC concurrence, that any participant has knowingly submitted false information or filed a false claim, such participant shall be ineligible for payments under the provisions of this part with respect to the calendar year in which the false information or claim was filed.</P> <P>(b) False information or false claims include a claim for payment for a SRP not carried out or for the establishment of SRP's which do not meet the required specifications. Any amounts paid under these circumstances shall be refunded and any amounts otherwise due the participant shall be withheld. The withholding or refunding of such payments will be in addition to any other penalty or liability otherwise imposed by law.</P> </SECTION> <SECTION> <SECTNO>§ 702.24</SECTNO> <SUBJECT>Depriving others of payments.</SUBJECT> <P>If the COC with STC concurrence finds that any participant has employed any scheme or device to deprive any other person of payments under this part, it may withhold or require a refund of all or part of any program payment otherwise due or paid that person in accordance with the CRSC Contract. A scheme or device includes, but is not limited to, coercion, fraud, or misrepresentation.</P> </SECTION> <SECTION> <SECTNO>§ 702.25</SECTNO> <SUBJECT>Miscellaneous.</SUBJECT> <P>(a) In accordance with the regulations set forth at 7 CFR part 796:</P> <P>(1) No payment shall be made to any participant who harvests or knowingly permits to be harvested for illegal use, marihuana or other such prohibited drug-producing plants on any part of the lands owned or controlled by such participants; and</P> <P>(2) Any participant who is convicted under Federal or State law of planting, cultivating, growing, producing, harvesting, or storing a controlled substance in any crop year shall be ineligible for any payments under this part during that crop year and the four (4) succeeding crop years.</P> <P>(b) In case of death, incompetency, or disappearance of any participant, any cost-share payment due shall be paid to the participant's successor in accordance with provisions of 7 CFR part 707.</P> </SECTION> <SECTION> <SECTNO>§ 702.26</SECTNO> <SUBJECT>Paperwork Reduction Act assigned numbers.</SUBJECT> <P>The Office of Management and Budget has approved the information collection requirements contained in these regulations under the provisions of 44 U.S.C. Chapter 33 and OMB number 0560-0128 has been assigned.</P> </SECTION> </PART> <PART> <EAR>Pt. 707</EAR> <HD SOURCE="HED">PART 707—PAYMENTS DUE PERSONS WHO HAVE DIED, DISAPPEARED, OR HAVE BEEN DECLARED INCOMPETENT</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>707.1</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>707.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>707.3</SECTNO> <SUBJECT>Death.</SUBJECT> <SECTNO>707.4</SECTNO> <SUBJECT>Disappearance.</SUBJECT> <SECTNO>707.5</SECTNO> <SUBJECT>Incompetency.</SUBJECT> <SECTNO>707.6</SECTNO> <SUBJECT>Death, disappearance, or incompetency of one eligible to apply for payment pursuant to the regulations in this part.</SUBJECT> <SECTNO>707.7</SECTNO> <SUBJECT>Form of application.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>54 Stat. 728, as amended, sec. 121, 70 Stat. 197, sec. 375, 52 Stat. 66, as amended, sec. 124(i), 75 Stat. 300, sec. 307(h), 76 Stat. 617, sec. 318, 76 Stat. 622, sec. 324(2), 76 Stat. 630, sec. 704, 68 Stat. 911, secs. 4, 8(b), 49 Stat. 164, 1149, as amended, sec. 101(4), 76 Stat. 606, sec. 3, 77 Stat. 45, sec. 4, 62 Stat. 1070; 5 U.S.C. 301, 7 U.S.C. 1334 note, 1339, 1375, 1379j, 1385, 1783, 1809; 16 U.S.C. 590d, 590h(b), 590(e), 590p(h), 15 U.S.C. 714b(d)(j)(k).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>30 FR 6246, May 5, 1965, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 707.1</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>This part applies to all programs in title 7 of the Code of Federal Regulations which are administered by the Farm Service Agency under which payments are made to eligible program participants. This part also applies to all other programs to which this part is applicable by the individual program regulations.</P> </SECTION> <SECTION> <SECTNO>§ 707.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>“Person” when relating to one who dies, disappears, or becomes incompetent, prior to receiving payment, <PRTPAGE P="39"/>means a person who has earned a payment in whole or in part pursuant to any of the programs to which this part is applicable. “Children” shall include legally adopted children who shall be entitled to share in any payment in the same manner and to the same extent as legitimate children of natural parents. “Brother” or “sister”, when relating to one who, pursuant to the regulations in this part, is eligible to apply for the payment which is due a person who dies, disappears, or becomes incompetent prior to the receipt of such payment, shall include brothers and sisters of the half blood who shall be considered the same as brothers and sisters of the whole blood. “Payment” means a payment by draft, check or certificate pursuant to any of the Programs to which this part is applicable. Payments shall not be considered received for the purposes of this part until such draft, check or certificate has been negotiated or used.</P> </SECTION> <SECTION> <SECTNO>§ 707.3</SECTNO> <SUBJECT>Death.</SUBJECT> <P>(a) Where any person who is otherwise eligible to receive a payment dies before the payment is received, payment may be made upon proper application therefor, without regard to claims of creditors other than the United States, in accordance with the following order of precedence:</P> <P>(1) To the administrator or executor of the deceased person's estate.</P> <P>(2) To the surviving spouse, if there is no administrator or executor and none is expected to be appointed, or if an administrator or executor was appointed but the administration of the estate is closed (i) prior to application by the administrator or executor for such payment or (ii) prior to the time when a check, draft, or certificate issued for such payment to the administrator or executor is negotiated or used.</P> <P>(3) If there is no surviving spouse, to the sons and daughters in equal shares. Children of a deceased son or daughter of a deceased person shall be entitled to their parent's share of the payment, share and share alike. If there are no surviving direct descendants of a deceased son or daughter of such deceased person, the share of the payment which otherwise would have been made to such son or daughter shall be divided equally among the surviving sons and daughters of such deceased person and the estates of any deceased sons or daughters where there are surviving direct descendants.</P> <P>(4) If there is no surviving spouse and no direct descendant, payment shall be made to the father and mother of the deceased person in equal shares, or the whole thereof to the surviving father or mother.</P> <P>(5) If there is no surviving spouse, no direct descendant, and no surviving parent, payment shall be made to the brothers and sisters of the deceased person in equal shares. Children of a deceased brother or sister shall be entitled to their parent's share of the payment, share and share alike. If there are no surviving direct descendants of the deceased brother or sister of such deceased person, the share of the payment which otherwise would have been made to such brother or sister shall be divided equally among the surviving brothers and sisters of such deceased person and the estates of any deceased brothers or sisters where there are surviving direct descendants.</P> <P>(6) If there is no surviving spouse, direct descendant, parent, or brothers or sisters or their descendants, the payment shall be made to the heirs-at-law in accordance with the law of the State of domicile of the deceased person.</P> <P>(b) If any person who is entitled to payment under the above order of prec-edence is a minor, payment of his share shall be made to his legal guardian, but if no legal guardian has been appointed payment shall be made to his natural guardian or custodian for his benefit, unless the minor's share of the payment exceeds $1,000, in which event payment shall be made only to his legal guardian.</P> <P>(c) Any payment which the deceased person could have received may be made jointly to the persons found to be entitled to such payment or shares thereof under this section or, pursuant to instructions issued by the Farm Service Agency, a separate payment may be issued to each person entitled to share in such payment.</P> </SECTION> <SECTION> <PRTPAGE P="40"/> <SECTNO>§ 707.4</SECTNO> <SUBJECT>Disappearance.</SUBJECT> <P>(a) In case any person otherwise eligible to receive payment disappears before receiving the payment, such payment may be made upon proper application therefor, without regard to claims of creditors other than the United States, to one of the following in the order mentioned:</P> <P>(1) The conservator or liquidator of his estate, if one be duly appointed.</P> <P>(2) The spouse.</P> <P>(3) An adult son or daughter or grandchild for the benefit of his estate.</P> <P>(4) The mother or father for the benefit of his estate.</P> <P>(5) An adult brother or sister for the benefit of his estate.</P> <P>(6) Such person as may be authorized under State law to receive payment for the benefit of his estate.</P> <P>(b) A person shall be deemed to have disappeared if (1) he has been missing for a period of more than 3 months, (2) a diligent search has failed to reveal his whereabouts, and (3) such person has not communicated during such period with other persons who would be expected to have heard from him. Evidence of such disappearance must be presented to the county committee in the form of a statement executed by the person making the application for payment, setting forth the above facts, and must be substantiated by a statement from a disinterested person who was well acquainted with the person who has disappeared.</P> </SECTION> <SECTION> <SECTNO>§ 707.5</SECTNO> <SUBJECT>Incompetency.</SUBJECT> <P>(a) Where any person who is otherwise eligible to receive a payment is adjudged incompetent by a court of competent jurisdiction before the payment is received, payment may be made, upon proper application therefor, without regard to claims of creditors other than the United States, to the guardian or committee legally appointed for such incompetent person. In case no guardian or committee has been appointed, payment, if not more than $1,000, may be made without regard to claims of creditors other than the United States, to one of the following in the order mentioned for the benefit of the incompetent person:</P> <P>(1) The spouse.</P> <P>(2) An adult son, daughter, or grandchild.</P> <P>(3) The mother or father.</P> <P>(4) An adult brother or sister.</P> <P>(5) Such person as may be authorized under State law to receive payment for him (see standard procedure prescribed for the respective region).</P> <P>(b) In case payment is more than $1,000, payment may be made only to such person as may be authorized under State law to receive payment for the incompetent.</P> </SECTION> <SECTION> <SECTNO>§ 707.6</SECTNO> <SUBJECT>Death, disappearance, or incompetency of one eligible to apply for payment pursuant to the regulations in this part.</SUBJECT> <P>In case any person entitled to apply for a payment pursuant to the provisions of § 707.3, § 707.4, § 707.5, or this section, dies, disappears, or is adjudged incompetent, as the case may be, after he has applied for such payment but before the payment is received, payment may be made upon proper application therefor, without regard to claims of creditors other than the United States, to the person next entitled thereto in accordance with the order of precedence set forth in § 707.3, § 707.4, or § 707.5, as the case may be.</P> </SECTION> <SECTION> <SECTNO>§ 707.7</SECTNO> <SUBJECT>Form of application.</SUBJECT> <P>Persons desiring to claim payment in accordance with this part 707 may do so on Form FSA-325, “Application for Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been Declared Incompetent”. If the person who died, disappeared, or was declared incompetent did not apply for payment by filing the applicable program application for payment form, such program application for payment must also be filed in accordance with applicable regulations. If the payment is made under the Naval Stores Conservation Program, Part II of the Form FSA-325 shall be executed by the local District Supervisor of the U.S. Forest Service. In connection with applications for payment under all other programs itemized in § 707.1, Form FSA-325, and program applications for payments where required, shall be filed with the FSA county office where the person who earned the payment would have been required to file his application.</P> </SECTION> </PART> <PART> <PRTPAGE P="41"/> <EAR>Pt. 708</EAR> <HD SOURCE="HED">PART 708—RECORD RETENTION REQUIREMENTS—ALL PROGRAMS</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Sec. 4, 49 Stat. 164, secs. 7-17, 49 Stat. 1148, as amended; 16 U.S.C. 590d, 590g-590q.</P> </AUTH> <SECTION> <SECTNO>§ 708.1</SECTNO> <SUBJECT>Record retention period.</SUBJECT> <P>For the purposes of the programs in this chapter, no receipt, invoice, or other record required to be retained by any agricultural producer as evidence tending to show performance of a practice under any such program needs to be retained by such producer more than two years following the close of the program year of the program.</P> <CITA>[25 FR 105, Jan. 7, 1960. Redesignated at 26 FR 5788, June 29, 1961]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="42"/> <HD SOURCE="HED">SUBCHAPTER B—FARM MARKETING QUOTAS, ACREAGE ALLOTMENTS, AND PRODUCTION ADJUSTMENT</HD> <PART> <EAR>Pt. 711</EAR> <HD SOURCE="HED">PART 711—MARKETING QUOTA REVIEW REGULATIONS</HD> <CONTENTS> <SUBJGRP> <HD SOURCE="HED">General</HD> <SECHD>Sec.</SECHD> <SECTNO>711.1</SECTNO> <SUBJECT>Effective date.</SUBJECT> <SECTNO>711.2</SECTNO> <SUBJECT>Expiration of time limitations.</SUBJECT> <SECTNO>711.3</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>711.4</SECTNO> <SUBJECT>Forms.</SUBJECT> <SECTNO>711.5</SECTNO> <SUBJECT>Public information.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Review Committee</HD> <SECTNO>711.6</SECTNO> <SUBJECT>Eligibility as member of a panel.</SUBJECT> <SECTNO>711.7</SECTNO> <SUBJECT>Appointment of members of a panel.</SUBJECT> <SECTNO>711.8</SECTNO> <SUBJECT>Oath of office.</SUBJECT> <SECTNO>711.9</SECTNO> <SUBJECT>Composition of review committee.</SUBJECT> <SECTNO>711.10</SECTNO> <SUBJECT>Term of office.</SUBJECT> <SECTNO>711.11</SECTNO> <SUBJECT>Compensation.</SUBJECT> <SECTNO>711.12</SECTNO> <SUBJECT>Effect of change in composition of review committee.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Jurisdiction</HD> <SECTNO>711.13</SECTNO> <SUBJECT>Areas of venue and jurisdiction.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Application for Review of Quota</HD> <SECTNO>711.14</SECTNO> <SUBJECT>Application for review.</SUBJECT> <SECTNO>711.15</SECTNO> <SUBJECT>Matters subject to review.</SUBJECT> <SECTNO>711.16</SECTNO> <SUBJECT>County committee answer.</SUBJECT> <SECTNO>711.17</SECTNO> <SUBJECT>Amendments.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Hearing and Determination</HD> <SECTNO>711.18</SECTNO> <SUBJECT>Place and schedule of hearing.</SUBJECT> <SECTNO>711.19</SECTNO> <SUBJECT>Notice of hearing.</SUBJECT> <SECTNO>711.20</SECTNO> <SUBJECT>Continuances.</SUBJECT> <SECTNO>711.21</SECTNO> <SUBJECT>Conduct of hearing.</SUBJECT> <SECTNO>711.22</SECTNO> <SUBJECT>Nonappearance of applicant.</SUBJECT> <SECTNO>711.23</SECTNO> <SUBJECT>Determination by review committee.</SUBJECT> <SECTNO>711.24</SECTNO> <SUBJECT>Service of determination.</SUBJECT> <SECTNO>711.25</SECTNO> <SUBJECT>Reopening of hearing.</SUBJECT> <SECTNO>711.26</SECTNO> <SUBJECT>Record of hearing.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Court Proceedings</HD> <SECTNO>711.27</SECTNO> <SUBJECT>Procedure in the case of court proceedings.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Puerto Rico</HD> <SECTNO>711.28</SECTNO> <SUBJECT>Special provisions applicable to Puerto Rico.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">OMB Control Numbers</HD> <SECTNO>711.29</SECTNO> <SUBJECT>OMB control numbers assigned pursuant to the Paperwork Reduction Act.</SUBJECT> </SUBJGRP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Secs. 301, 363-368, 371, 374, 375, 379, 52 Stat. 38, as amended, 63-66, amended, 79 Stat. 1211, as amended; 7 U.S.C. 1301, 1363-1368, 1371, 1374, 1375, 1379.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>35 FR 15355, Oct. 2, 1970, unless otherwise noted.</P> </SOURCE> <SUBJGRP> <HD SOURCE="HED">General</HD> <SECTION> <SECTNO>§ 711.1</SECTNO> <SUBJECT>Effective date.</SUBJECT> <P>The Marketing Quota Review Regulations (26 FR 10204, 27 FR 4831, 6539, 28 FR 3913, 31 FR 4271, 5663, 32 FR 15704) shall remain in effect and shall apply to all actions and proceedings taken prior to October 15, 1970, and such regulations are superseded as of midnight, October 14, 1970. The provisions of §§ 711.1 to 711.50 are effective October 15, 1970.</P> </SECTION> <SECTION> <SECTNO>§ 711.2</SECTNO> <SUBJECT>Expiration of time limitations.</SUBJECT> <P>The provisions of part 720 of this chapter concerning the expiration of time limitations shall apply to this part.</P> </SECTION> <SECTION> <SECTNO>§ 711.3</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) <E T="03">General terms.</E> In determining the meaning of the provisions of this part, unless the context indicates otherwise, words importing the singular include and apply to several persons or things, words importing the plural include the singular, words importing the masculine gender include the feminine as well, and words used in the present tense include the future as well as the present. The definitions in part 719 of this chapter shall apply to this part.</P> <P>(b) <E T="03">Act.</E> Act means the Agricultural Adjustment Act of 1938, and any amendments or supplements thereto.</P> <P>(c) <E T="03">Applicant.</E> Applicant means the farmer who filed an application for review of a farm marketing quota and if a hearing involves the quota of a farm resulting from the reconstitution by division of a parent farm, the farm operator of each farm resulting from such reconstitution shall be considered an applicant for purposes of this part.</P> <P>(d) <E T="03">Clerk.</E> Clerk means the county executive director for the county in which the application for review is filed unless another employee of the county or State office is designated by the State executive director to serve as clerk to the review committee.</P> <P>(e) <E T="03">Review committee.</E> Review committee means three farmers designated <PRTPAGE P="43"/>to review a quota by the State executive director from the panel of farmers appointed by the Secretary under section 363 of the Act.</P> <P>(f) <E T="03">Quota.</E> Quota means the farm marketing quota established under the Act for a farm during a year in which quotas are approved in the national referendum for a commodity, including any of the following factors:</P> <P>(1) Farm acreage allotment, farm marketing quota, and any adjustments in such allotment and quota resulting from: (i) Program violations; (ii) lease and transfer; (iii) sale and purchase; (iv) overmarketing and undermarketing; (v) release and reapportionment; (vi) eminent domain transactions; and (vii) forfeiture and reallocation.</P> <P>(2) Farm preliminary yield, farm normal yield and farm yield.</P> <P>(3) A determination of the land constituting a farm for which a farm acreage allotment or farm marketing quota is established, including the following: (i) Land devoted to nonagricultural use, (ii) land used for agricultural purposes, (iii) cropland acreage; and (iv) tillable cropland.</P> <P>(4) Acreage planted to the commodity on the farm.</P> <P>(5) Actual production for the farm.</P> <P>(6) Farm marketing excess (acres or pounds).</P> <P>(7) Marketing quota penalties, including but not limited to, assessments for marketing quota violations involving: (i) False identification, (ii) failure to account for production and disposition, (iii) failure to file a report, and (iv) the filing of a false report.</P> <SECAUTH>(Secs. 301, 363-368, 371, 374, 375, 379, 52 Stat. 38 as amended, 63-64, as amended, 66, as amended; 7 U.S.C. 1301, 1363-1368, 1375)</SECAUTH> <CITA>[35 FR 15355, Oct. 2, 1970, as amended by Amdt. 9, 45 FR 37398, June 3, 1980; 49 FR 38240, Sept. 28, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 711.4</SECTNO> <SUBJECT>Forms.</SUBJECT> <P>The following general forms, as revised from time to time, are prescribed for use in connection with review proceedings;</P> <P>(a) MQ-53 Application for Review of Farm Marketing Quota.</P> <P>(b) MQ-54 Notice of Untimely Filing of Review Application.</P> <P>(c) MQ-56 Notice of Hearing of Review Application.</P> <P>(d) MQ-58 Determination of Review Committee Farm Marketing Quota.</P> <P>(e) MQ-59 Oath of Review Committeeman.</P> </SECTION> <SECTION> <SECTNO>§ 711.5</SECTNO> <SUBJECT>Public information.</SUBJECT> <P>The clerk shall maintain a record of applications and review committee proceedings which shall be available at the office of the clerk for public inspection and copying in accordance with part 798 of this chapter.</P> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Review Committee</HD> <SECTION> <SECTNO>§ 711.6</SECTNO> <SUBJECT>Eligibility as member of a panel.</SUBJECT> <P>Any farmer who meets the eligibility requirements for county committeeman prescribed in the regulations in part 7 of subtitle A of this title, as amended, in a county within the area of venue for which he is to be appointed shall be eligible for appointment as a member of a review committee panel for such area of venue. If the area of venue consists of only one county or a part of a county, these eligibility requirements must be met in such county or in a nearby county. No farmer whose legal residence is in one State shall be eligible for appointment as a member of a review committee panel for an area of venue in another State.</P> </SECTION> <SECTION> <SECTNO>§ 711.7</SECTNO> <SUBJECT>Appointment of members of a panel.</SUBJECT> <P>The Secretary shall appoint six or more eligible farmers to serve as members of a review committee panel in each area of venue. Notice of appointment shall be sent to the State committee, which shall notify the farmers so appointed. Appointments may be made before, during, or after the period in which applications for review of quotas are required to be filed. Notwithstanding the foregoing, the Secretary shall have the continuing power to revoke or suspend any appointment made pursuant to the regulations in this part, and subject to the provisions of the act, to make such other appointment deemed proper.</P> </SECTION> <SECTION> <PRTPAGE P="44"/> <SECTNO>§ 711.8</SECTNO> <SUBJECT>Oath of office.</SUBJECT> <P>Each farmer appointed to serve as a member of a review committee panel shall, as soon as possible after appointment, execute an oath of office on such form as may be prescribed by the Deputy Administrator, duly subscribed and sworn to or affirmed before a notary public. No farmer shall serve on a review committee unless such oath of office has been duly executed and filed with the State executive director or the clerk. A farmer appointed for consecutive terms to serve as a member of a review committee panel shall not be required to file a new oath of office after the original filing. If the form of oath of office is materially changed, a new oath of office shall be executed if required by the Deputy Administrator.</P> </SECTION> <SECTION> <SECTNO>§ 711.9</SECTNO> <SUBJECT>Composition of review committee.</SUBJECT> <P>(a) <E T="03">Three designated members from the panel constitute a review committee.</E> Three members from the panel shall act as a review committee to hear applications for review for the prescribed area of venue. The State executive director shall designate from the panel of members for the prescribed area of venue three members who shall act as a review committee to hear specific applications and shall designate one of these three members as chairman of the review committee and another member as vice-chairman. Where the number of applications pending require two or more review committees for prompt disposition of such applications, the State executive director shall designate the members of each review committee, the chairman and vice chairman thereof, and the specific application to be heard by each review committee. Two or more review committees may hear applications concurrently in an area of venue. In the absence of the chairman, the vice chairman shall perform the duties and exercise the powers of the chairman. The State executive director shall notify members of each review committee of the schedule of hearings. No member shall serve in any case in which a quota will be reviewed for a farm in which such member, any of his relatives or business associates, is interested, nor shall any member serve where he had acted as State, county, or community committee member on a quota to be reviewed by the review committee.</P> <P>(b) <E T="03">Only two members present to commence hearing.</E> Where only two members of a review committee are present to commence a hearing, although three members were scheduled to hear the application, at the request of or with the consent of the applicant in writing, a hearing conducted by two members of the review committee shall be deemed to be a regular hearing of the review committee as to such application. The determination made by such members shall constitute the determination of the review committee. In the event such members cannot agree upon a determination, such fact shall be set forth in writing and a new hearing scheduled by the State executive director. If the applicant does not consent in writing to a hearing conducted by two members of the review committee, the hearing shall be rescheduled.</P> <P>(c) <E T="03">Only two members remain to complete a hearing.</E> Where only two members of a review committee remain to complete a hearing commenced with three members, due to serious illness, death, or other cause which prevents one of the members from completing the hearing within a reasonable time, at the request or with the consent of the applicant in writing, the remaining two members of the review committee shall henceforth constitute an entire review committee for the purpose of such hearing. In the event such members cannot agree upon a determination, such fact shall be set forth in writing and a new hearing scheduled by the State executive director. If the applicant does not consent in writing to completion of the hearing by two members of the review committee, the hearing shall be rescheduled.</P> <P>(d) <E T="03">Reopened or remanded hearings.</E> In the case of a reopened or remanded hearing, if any member of the review committee is no longer in office because of death, resignation, or ineligibility, the State executive director shall designate another member of the review committee panel to serve on the review committee. If a hearing held pursuant to paragraph (b) or (c) of this section is reopened or remanded and <PRTPAGE P="45"/>only one review committee member is available to hear such reopened or remanded hearing, the State executive director shall designate two additional members from the review committee panel to serve on the review committee.</P> </SECTION> <SECTION> <SECTNO>§ 711.10</SECTNO> <SUBJECT>Term of office.</SUBJECT> <P>Appointment as a member of a review committee panel shall be for a term of 3 calendar years. A member may be reappointed for succeeding terms. Notwithstanding the foregoing, a review committee shall continue in office to conclude hearings before it which are begun during such 3-year term and make final determinations thereof, or to hold a reopened hearing, or to conclude a hearing remanded to it by a court.</P> <CITA>[Amdt. 3, 38 FR 967, Jan. 8, 1973]</CITA> </SECTION> <SECTION> <SECTNO>§ 711.11</SECTNO> <SUBJECT>Compensation.</SUBJECT> <P>The members designated as review committeemen shall receive compensation when serving at the same rate as that received by the members of the county committee which established the quotas sought to be reviewed. No member of a review committee shall be entitled to receive compensation for services as such member for more than 30 days in any one year. Payment of compensation, reimbursement for travel expenses and rates therefor, shall be made under such conditions as may be prescribed by the Deputy Administrator.</P> </SECTION> <SECTION> <SECTNO>§ 711.12</SECTNO> <SUBJECT>Effect of change in composition of review committee.</SUBJECT> <P>Nothing contained in §§ 711.6 to 711.11 relating to any vacancy or revocation or suspension of appointment and nothing done pursuant thereto shall be construed as affecting the validity of any prior hearing conducted or determination made in accordance with the regulations in this part, in which the member of the review committee whose office has become vacant participated, or as affecting in any way court proceeding which may be instituted to review such determination.</P> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Jurisdiction</HD> <SECTION> <SECTNO>§ 711.13</SECTNO> <SUBJECT>Areas of venue and jurisdiction.</SUBJECT> <P>(a) <E T="03">Areas of venue.</E> The State committee shall establish one or more areas of venue in the State. An area of venue may consist of all or part of a county, or more than one county within a State. In establishing areas of venue, the State committee shall take into consideration the requirements of section 363 of the Act as to eligibility of review committee members, the prompt handling of applications for review, transportation problems and the limit of 30-day service by review committeemen in any one year.</P> <P>(b) <E T="03">Jurisdiction.</E> A review committee shall have jurisdiction within the area of venue for which it is established to hear applications respecting quotas established or denied by written notice issued by the county committee or other authorized official for farms within its area of venue, in accordance with this part.</P> <P>(c) A listing of the areas of venue within a State shall be available from the State FSA office and the Deputy Administrator.</P> <CITA>[35 FR 15355, Oct. 2, 1970, as amended at 49 FR 38240, Sept. 28, 1984]</CITA> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Application for Review of Quota</HD> <SECTION> <SECTNO>§ 711.14</SECTNO> <SUBJECT>Application for review.</SUBJECT> <P>(a) <E T="03">Manner and time of filing.</E> Any farmer who is dissatisfied with his quota may, within 15 days after the date of mailing to him of notice of such quota, file a written application for review thereof by the review committee. Such 15-day period is prescribed in accordance with section 363 of the Act. Unless application for review is timely filed, as determined under this section, the quota established by the notice shall not be subject to review by the review committee. Notice of quota subject to review under this part includes an official written notice as to the land constituting the farm. For example, a notice denying a request for farm reconstitution would be such a reviewable notice of quota. An application shall be in writing and addressed to, and filed with, the county executive director for the county from which the <PRTPAGE P="46"/>notice of quota was received. Any application (Form MQ-53 available on request) whether made on Form MQ-53 or not, shall contain the following:</P> <P>(1) Date of application and commodity (including type where applicable, e.g. Upland cotton, Flue-cured tobacco).</P> <P>(2) Correct full name and address of applicant.</P> <P>(3) Brief statement of each ground upon which the application is based.</P> <P>(4) A statement of the amount of quota which it is claimed should have been established.</P> <P>(5) Signature of applicant.</P> <FP>In any case where an application is timely filed for review of a quota on a farm which was reconstituted by division of a parent farm into two or more farms, such application shall be considered an application for review of the reconstitution of the parent farm. In any such case the farm operator of each farm resulting from such reconstitution shall be considered an applicant for purposes of this part with all the rights and privileges provided in this part. If an action may be taken by an applicant which affects the rights of any other applicant in the case, the other applicants shall be given the opportunity to concur in such action or to oppose such action.</FP> <P>(b) <E T="03">Procedure where application is not timely filed.</E> The county committee shall examine each application for review. If the application is not filed within the prescribed 15-day period, the county executive director shall send a notice of untimely filing on Form MQ-54 by certified mail to the applicant at the address shown on the application. The applicant may file a request in writing with the county executive director within 15 days after the date of mailing such notice to him requesting a review committee hearing on the sole issue of whether the application was filed within the prescribed 15-day period. In the absence of timely request in writing for such review committee hearing, the application shall be deemed withdrawn by the applicant. If timely request in writing for such review committee hearing is filed, a copy of the application and request shall be forwarded by the county executive director to the State executive director with a request that a hearing on the sole issue of timely filing be scheduled before the review committee. In cases involving the sole issue of timely filing of an application, the review committee shall determine whether the date the application was filed, or the postmark date in case of mailing by the applicant, was within the 15-day period. If the review committee determines that the application was timely filed, a hearing on the merits of the application shall be held. In addition, a hearing on the merits shall be conducted and the application treated as timely filed in any case where the review committee determines that the applicant in good faith requested review of his quota by the county or State committee under the regulations in part 780 of this chapter in reliance upon action or advice of any authorized representative of a county or State committee and subsequently filed application for review under this part within a reasonable time after he learns that the quota is subject to review committee jurisdiction.</P> <P>(c) <E T="03">Withdrawal of application.</E> An application may be withdrawn upon the written request of the applicant. Any application so withdrawn or deemed withdrawn under paragraph (b) of this section shall be endorsed by the clerk “Dismissed by the applicant”.</P> <P>(d) <E T="03">Procedure where application is timely filed.</E> The county committee shall examine each application for review and where an application is found to be timely filed, the county executive director shall forward a copy of the application to the State executive director with a request that a hearing on the merits be scheduled before the review committee.</P> </SECTION> <SECTION> <SECTNO>§ 711.15</SECTNO> <SUBJECT>Matters subject to review.</SUBJECT> <P>In all cases, the review committee shall consider only such factors as, under applicable provisions of law and regulations, are required or permitted to be considered by the county committee in the establishment of the quota being reviewed. The establishment of national marketing quotas and apportionment of national acreage allotments and marketing quotas among States and counties and the establishment of reserve acreages and quotas at <PRTPAGE P="47"/>the national level and apportionment of such reserves among States and counties are not subject to review by a review committee. Review of a quota may include any of the factors which enter into the establishment of such quota for the farm and crop year as set forth in § 711.3(f): <E T="03">Provided, however,</E> That any factor of such quota considered by a review committee in a prior determination for the farm and crop year shall not be considered in a subsequent review proceeding. For example, a determination of the farm acreage allotment by the review committee would not be reconsidered upon any application for review of the farm marketing excess for the same farm and crop year.</P> <CITA>[49 FR 38240, Sept. 28, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 711.16</SECTNO> <SUBJECT>County committee answer.</SUBJECT> <P>(a) The county committee shall prepare a written answer to each application scheduled for hearing setting forth the pertinent facts, the applicable regulations, the data used in establishing the quota and any other matters deemed pertinent:</P> <P>(b) <E T="03">Provided,</E> That the answer may be limited to the issue of timely filing where the hearing is limited to that issue. If the county committee determines that the increase, adjustment or other determination requested in the application is proper in whole or in part, the written answer shall set forth the proposed determination and in such cases, the applicant shall be notified by the county committee of such proposed determination prior to the scheduled review hearing if practicable to do so. In the event the applicant is satisfied with the proposed determination, the county committee shall, upon the withdrawal of the application, take the necessary action to revise the quota within the limits of the Act and applicable commodity regulations if the required amount of acreage allotment or marketing quota is available in the county. The State executive director may perform the functions of the county committee under this section and the functions of the county committee and county executive director under § 711.14 (b) and (d) in any case where the application for review involves a notice of farm marketing quota issued by officials other than the county committee.</P> <CITA>[35 FR 15355, Oct. 2, 1970, as amended at 49 FR 38240, Sept. 28, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 711.17</SECTNO> <SUBJECT>Amendments.</SUBJECT> <P>Upon due request, and within the discretion of the review committee, the right to amend the application and all procedural documents in connection with any hearing, shall be granted upon such reasonable terms as the review committee may deem right and proper.</P> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Hearing and Determination</HD> <SECTION> <SECTNO>§ 711.18</SECTNO> <SUBJECT>Place and schedule of hearing.</SUBJECT> <P>The place of hearing shall be in the office of the county committee through which the quota sought to be reviewed was established, or such other appropriate place in the county as may be designated by the State executive director or by the review committee in cases arising under § 711.21: <E T="03">Provided, however,</E> That the place of hearing may be in some other county if agreed to in writing by the applicant. The State executive director shall schedule applications for hearings and forward such schedule to the clerk.</P> </SECTION> <SECTION> <SECTNO>§ 711.19</SECTNO> <SUBJECT>Notice of hearing.</SUBJECT> <P>The clerk shall give written notice on Form MQ-56 to the applicant by depositing such notice in the U.S. mail, certified and addressed to the last known address of the applicant at least 10 days prior to the time appointed for the hearing and copies of such notice shall also be sent to the county committee and the State office. If the applicant requests waiver of such 10-day period, the hearing may be scheduled earlier upon consent of the other interested parties. The notice of the hearing shall specify the time and place of the hearing, contain a statement of the statutory authority for the hearing, state that the application will be heard by the review committee duly appointed for the area of venue in which the applicant's farm is located, and that a verbatim transcript may be obtained by the applicant if he makes arrangement therefor before the hearing and pays the expense thereof.</P> </SECTION> <SECTION> <PRTPAGE P="48"/> <SECTNO>§ 711.20</SECTNO> <SUBJECT>Continuances.</SUBJECT> <P>Hearings shall be held at the time and place set forth in the notice of hearing or in any subsequent notice amending or superseding the prior notice, but may without notice other than an announcement at the hearing by the chairman of the review committee, be continued from day to day or adjourned to a different place in the county or to a later date or to a date and place to be fixed in a subsequent notice to be issued pursuant to § 711.19. In the event a full committee of three is not present, those members present, or in the absence of the entire committee, the clerk, shall postpone the hearing unless the hearing is held pursuant to § 711.9 (b) or (c). There shall not be a continuance for lack of a full committee in the case of a reopened or remanded hearing where the hearing was initially held pursuant to § 711.9 (b) or (c) and the two review committeemen who previously held the hearing are present and eligible to serve.</P> </SECTION> <SECTION> <SECTNO>§ 711.21</SECTNO> <SUBJECT>Conduct of hearing.</SUBJECT> <P>(a) <E T="03">Open to public.</E> Except as otherwise provided in §§ 711.1 to 711.50, each hearing shall take place before the entire review committee and shall be presided over by the chairman of such committee. The hearing shall be open to the public and shall be conducted in a fair and impartial manner and in such a way as to afford the applicant, members of the appropriate county and community committees, and appropriate officers and agents of the Department of Agriculture, and all persons appearing on behalf of such parties, reasonable opportunity to give and produce evidence relevant to the quota being reviewed.</P> <P>(b) <E T="03">Consolidation of hearings.</E> Wherever practicable, two or more applications relating to the same commodity and the same farm shall be consolidated by the review committee on its own motion or at the request of the State executive director and heard at the same time on the same record. In any case involving two or more farms resulting from reconstitution by division of a parent farm, the hearing shall be consolidated.</P> <P>(c) <E T="03">Representation.</E> The applicant and the Secretary may be represented at the hearing. The county committee shall be present or represented at the hearing.</P> <P>(d) <E T="03">Order of procedure.</E> At the commencement of the hearing, the chairman of the review committee shall read or cause to be read the pertinent portions of the application for review. The written answer of the county committee shall be submitted and shall be made a part of the record of the hearing. If the applicant asserts and shows to the satisfaction of the review committee that he has not been informed of the county committee's position in time to afford him adequate opportunity to prepare and present his case, the review committee shall continue the hearing, without notice other than announcement thereof at the hearing, for such period of time as will afford the applicant reasonable opportunity to meet the issues of fact and law involved. After answer by the county committee and following such continuance, if any, as may be granted by the review committee, evidence shall be received with respect to the matters relevant to the quota under review in such order as the chairman of the review committee shall prescribe. The review committee may take official notice of relevant publications of the Department of Agriculture and regulations of the Secretary.</P> <P>(e) <E T="03">Submission of evidence.</E> The burden of proof shall be upon the applicant as to all issues of fact raised by him. Each witness shall testify under oath or affirmation administered by the member of the review committee who is presiding at the hearing. The review committee shall confine the evidence to pertinent matters and shall exclude irrelevant, immaterial, or unduly repetitious evidence. Interested persons shall be permitted to present oral and documentary evidence, to submit rebuttal evidence and to conduct such cross-examination as may be required for a full and true disclosure of the facts. The hearing shall be concluded within such reasonable time as may be determined by the review committee.</P> <P>(f) <E T="03">Transcript of testimony.</E> The review committee shall provide for the taking of such notes including but not limited to stenographic reports or recordings at the hearing as will enable it to make <PRTPAGE P="49"/>a summary of the proceedings and the testimony received at the hearing. The testimony received at the hearing shall be reported verbatim by a representative of a private firm under an existing Departmental contract for such services if the review committee, the State Executive Director, or the applicant, requests such transcript be made. If such transcript is so requested, the State Executive Director shall advise the Deputy Administrator, State and County Operations, prior to the hearing date who will then arrange for the service. A copy of such transcript shall be furnished to each of the following: The review committee, the State Executive Director, and the Regional Attorney, Office of the General Counsel, United States Department of Agriculture. The applicant or his representative may obtain a copy from the firm at his own expense.</P> <P>(g) <E T="03">Written arguments and proposed findings.</E> The review committee shall permit the applicant, the members of the appropriate county and community committees, and appropriate officers and agents of the Department of Agriculture to file written arguments and proposed findings of fact and conclusions, based on the evidence adduced at the hearing, for the consideration of the review committee within such reasonable time after the conclusion of the hearing as may be prescribed by the review committee. Such written arguments and proposed findings shall be filed in triplicate with the clerk and an additional copy thereof shall be provided to the other party.</P> <CITA>[35 FR 15355, Oct. 2, 1970, as amended by Amdt. 5, 38 FR 16989, June 28, 1973]</CITA> </SECTION> <SECTION> <SECTNO>§ 711.22</SECTNO> <SUBJECT>Nonappearance of applicant.</SUBJECT> <P>(a) <E T="03">Original hearing.</E> If, at the time of the hearing, the applicant is absent and no appearance is made on his behalf, the review committee shall, after a lapse of such period of time as it may consider proper and reasonable, have the name of the absent applicant called in the hearing room. If, upon such call, there is no response, and no appearance on behalf of such applicant and no continuance has been requested by the applicant, the review committee shall thereupon close the hearing, as to such applicant, and, without further proceedings in the case, make a determination dismissing the application.</P> <P>(b) <E T="03">Reopened or remanded hearing.</E> If, at a hearing which is reopened pursuant to § 711.25 or remanded by a court, the applicant is absent and no appearance is made on his behalf, the review committee shall continue the hearing for a reasonable period of time and if the applicant does not appear at such continued hearing, the review committee shall make a determination.</P> </SECTION> <SECTION> <SECTNO>§ 711.23</SECTNO> <SUBJECT>Determination by review committee.</SUBJECT> <P>As soon as practicable after hearing on an application, including a hearing on the sole issue of timely filing, the review committee shall make a determination upon the application. If it is determined by the review committee that the application should be dismissed for untimely filing or denied, the review committee shall so indicate. If it is determined that the application should be granted in whole or in part, the review committee shall establish the quota which it finds to be proper. Each determination made by the review committee shall be in writing, shall contain specific findings of fact and conclusions together with the reasons or basis therefor, and shall be based upon and made in accordance with reliable, probative, and substantial evidence adduced at the hearing. The concurrence of two members of the review committee shall be sufficient to make a determination. The written determination shall contain such subscription by each member of the review committee as will indicate his concurrence therein or his dissent therefrom. In case of an increase in the quota, the review committee shall specifically state in the determination in what respect, if any, the county committee has failed properly to apply the act and regulations thereunder. If such increase is based upon evidence not available to the county committee, the findings of the review committee shall so indicate. The appropriate county executive director shall make available to the review committee such clerical and stenographic assistance as may be required.</P> </SECTION> <SECTION> <PRTPAGE P="50"/> <SECTNO>§ 711.24</SECTNO> <SUBJECT>Service of determination.</SUBJECT> <P>A copy of the determination, certified by the clerk as a true and correct copy of the signed original, shall be served upon the applicant by sending the same by certified mail addressed to the applicant at his last known address. The copy of the determination shall contain at the top thereof substantially the following statement: “To all persons who, as operator, landlord, tenant, or sharecropper, are or will be interested in the above-named commodity on the farm identified below in the year for which the marketing quota being reviewed is established” and such statement shall constitute notice to all such persons. The clerk shall make a notation on the original determination of the date and place of such mailing. The clerk forthwith shall forward two copies of such determination to the State office, and one copy to the county committee. The determination of the review committee does not become final until the period for reopening of hearing under § 711.25 has expired without any reopening; or if reopened thereunder, such determination becomes final upon issuance of a new determination pursuant to the reopened hearing, subject to further appeal to a court by the applicant.</P> </SECTION> <SECTION> <SECTNO>§ 711.25</SECTNO> <SUBJECT>Reopening of hearing.</SUBJECT> <P>(a) <E T="03">Upon motion of review committee.</E> Upon its own motion within 15 days from the date of mailing to the applicant of a copy of the determination of the review committee, the review committee may reopen a hearing for the purpose of taking additional evidence or of adding any relevant matter or document.</P> <P>(b) <E T="03">Upon written request based on new evidence.</E> Upon written request by the applicant, the county committee, the State executive director, or other interested parties, to the review committee within 15 days from the date of mailing to the applicant of a copy of the determination of the review committee, the review committee shall reopen the hearing for the purpose of taking additional evidence or of adding any relevant matter or document if the review committee finds that such evidence or documents constitute new evidence not available to the parties at the time of the hearing.</P> <P>(c) <E T="03">Upon written notice by the Secretary.</E> Upon written notice by the Secretary or on his behalf by the Deputy Administrator to the review committee within 45 days from the date of mailing to the applicant of a copy of the determination of the review committee on Form MQ-58, the hearing shall be deemed reopened and the State executive director shall schedule the reopened hearing.</P> <P>(d) <E T="03">Schedule of reopened hearing.</E> Schedule of and notice of any reopened hearing shall follow the requirements of §§ 711.18 and 711.19 insofar as practicable. Notwithstanding the provisions of paragraphs (a), (b), and (c) of this section, no hearing shall be reopened after an appeal to a court pursuant to section 365 of the act has been timely filed by the applicant. No special hearing to contest a reopening of a hearing shall be scheduled; however, the applicant may present evidence and arguments to contest the reopening when the reopened hearing is held.</P> </SECTION> <SECTION> <SECTNO>§ 711.26</SECTNO> <SUBJECT>Record of hearing.</SUBJECT> <P>The record of the proceedings shall be prepared by the clerk and shall consist of the following:</P> <P>(a) All procedural documents in the case under review, including the application and written notices of quota and hearing and any other written notice in connection with the application.</P> <P>(b) Copies of regulations presented at the hearing.</P> <P>(c) The answer of the county committee or the State executive director.</P> <P>(d) The summary of the proceedings and the testimony prepared by the review committee if a verbatim transcript is not made, or a transcript of the testimony where a verbatim transcript is made, in accordance with § 711.21(f), to which shall be annexed any documentary evidence received at the hearing.</P> <P>(e) Any written arguments or proposed findings of fact and conclusions filed in connection with the hearing.</P> <P>(f) The written determination of the review committee.</P> <P>(g) A list of all papers included in the record and a certificate by the clerk <PRTPAGE P="51"/>stating that such record is true, correct and complete.</P> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Court Proceedings</HD> <SECTION> <SECTNO>§ 711.27</SECTNO> <SUBJECT>Procedure in the case of court proceedings.</SUBJECT> <P>Upon the institution of any suit against the review committee for the purpose of reviewing its determination upon any application for review, the review committee is required by section 365 of the Act to certify and file in court a transcript of the record upon which the determination was made, together with the findings of fact made by the review committee. Any suit for review is required to be instituted by the applicant within 15 days after a notice of the review committee's determination is mailed to him. Such suit may be instituted in the U.S. District Court or in any court of record of the State having general jurisdiction, sitting in the county of the district in which the applicant's farm is located. The bill of complaint in such proceeding may be served by delivering a copy thereof to any member of the review committee. Any member of the review committee served with papers in such suit shall immediately forward such papers to the clerk. No member of the review committee shall appear or permit any appearance in his behalf or in behalf of the review committee, or take any action in respect to the defense of such suit, except in accordance with the instructions from the Deputy Administrator.</P> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Puerto Rico</HD> <SECTION> <SECTNO>§ 711.28</SECTNO> <SUBJECT>Special provisions applicable to Puerto Rico.</SUBJECT> <P>Notwithstanding the provisions of §§ 711.1 to 711.50, the Caribbean Area Agricultural Stabilization and Conservation Committee (hereinafter referred to as the “ASC Committee”) shall perform, insofar as applicable, the duties and assume such responsibilities and be subject to the limitations as are otherwise required of State and county committees except as provided herein. The Director, Caribbean Area FSA office, shall recommend members of the review committee panel, the areas of venue, and perform the functions of the State executive director. Any farmer who is eligible to vote in a referendum for which a quota has been proclaimed shall be eligible for appointment as a member of a review committee panel. The clerk shall be the ASC district supervisor of the district in which the review committee will hold its hearings. Where it is impractical or impossible to use the United States mail to serve the applicant with notice of hearing or determination, use shall be made of such other method of service as is available. However, when such other method is used, the ASC Committee shall make provision for keeping an accurate record of the date and method of delivery to the applicant.</P> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">OMB Control Numbers</HD> <SECTION> <SECTNO>§ 711.29</SECTNO> <SUBJECT>OMB control numbers assigned pursuant to the Paperwork Reduction Act.</SUBJECT> <P>The information collection requirements contained in these regulations (7 CFR part 711) have been approved by the Office of Management and Budget (OMB) in accordance with the provisions of the 44 U.S.C. Chapter 35 and have been assigned OMB control number 0560-0068.</P> <CITA>[49 FR 38240, Sept. 28, 1984]</CITA> </SECTION> </SUBJGRP> </PART> <PART> <EAR>Pt. 714</EAR> <HD SOURCE="HED">PART 714—REFUNDS OF PENALTIES ERRONEOUSLY, ILLEGALLY, OR WRONGFULLY COLLECTED</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>714.35</SECTNO> <SUBJECT>Basis, purpose, and applicability.</SUBJECT> <SECTNO>714.36</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>714.37</SECTNO> <SUBJECT>Instructions and forms.</SUBJECT> <SECTNO>714.38</SECTNO> <SUBJECT>Who may claim refund.</SUBJECT> <SECTNO>714.39</SECTNO> <SUBJECT>Manner of filing.</SUBJECT> <SECTNO>714.40</SECTNO> <SUBJECT>Time of filing.</SUBJECT> <SECTNO>714.41</SECTNO> <SUBJECT>Statement of claim.</SUBJECT> <SECTNO>714.42</SECTNO> <SUBJECT>Designation of trustee.</SUBJECT> <SECTNO>714.43</SECTNO> <SUBJECT>Recommendation by county committee.</SUBJECT> <SECTNO>714.44</SECTNO> <SUBJECT>Recommendation by State committee.</SUBJECT> <SECTNO>714.45</SECTNO> <SUBJECT>Approval by Deputy Administrator.</SUBJECT> <SECTNO>714.46</SECTNO> <SUBJECT>Certification for payment.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Secs. 372, 375, 52 Stat. 65, as amended, 66, as amended; 7 U.S.C. 1372, 1375.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>35 FR 12098, July 29, 1970, unless otherwise noted.</P> </SOURCE> <SECTION> <PRTPAGE P="52"/> <SECTNO>§ 714.35</SECTNO> <SUBJECT>Basis, purpose, and applicability.</SUBJECT> <P>(a) <E T="03">Basis and purpose.</E> The regulations set forth in this part are issued pursuant to the Agricultural Adjustment Act of 1938, as amended, for the purpose of prescribing the provisions governing refunds of marketing quota penalties erroneously, illegally, or wrongfully collected with respect to all commodities subject to marketing quotas under the Act.</P> <P>(b) <E T="03">Applicability.</E> This part shall apply to claims submitted for refunds of marketing quota penalties erroneously, illegally, or wrongfully collected on all commodities subject to marketing quotas under the Act. It shall not apply to the refund of penalties which are deposited in a special deposit account pursuant to sections 314(b), 346(b), 356(b), or 359 of the Agricultural Adjustment Act of 1938, as amended, or paragraph (3) of Pub. L. 74, 77th Congress, available for the refund of penalties initially collected which are subsequently adjusted downward by action of the county committee, review committee, or appropriate court, until such penalties have been deposited in the general fund of the Treasury of the United States after determination that no downward adjustment in the amount of penalty is warranted. All prior regulations dealing with refunds of penalties which were contained in this part are superseded upon the effective date of the regulations in this part.</P> </SECTION> <SECTION> <SECTNO>§ 714.36</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) <E T="03">General terms.</E> In determining the meaning of the provisions of this part, unless the context indicates otherwise, words imparting the singular include and apply to several persons or things, words imparting the plural include the singular, words imparting the masculine gender include the feminine as well, and words used in the present tense include the future as well as the present. The definitions in part 719 of this chapter shall apply to this part. The provisions of part 720 of this chapter concerning the expiration of time limitations shall apply to this part.</P> <P>(b) <E T="03">Other terms applicable to this part.</E> The following terms shall have the following meanings:</P> <P>(1) “Act” means the Agricultural Adjustment Act of 1938, and any amendments or supplements thereto.</P> <P>(2) “Claim” means a written request for refund of penalty.</P> <P>(3) “Claimant” means a person who makes a claim for refund of penalty as provided in this part.</P> <P>(4) “County Office” means the office of the Agricultural Stabilization and Conservation County Committee.</P> <P>(5) “Penalty” means an amount of money collected, including setoff, from or on account of any person with respect to any commodity to which this part is applicable, which has been covered into the general fund of the Treasury of the United States, as provided in section 372(b) of the Act.</P> <P>(6) “State office” means the office of the Agricultural Stabilization and Conservation State Committee.</P> </SECTION> <SECTION> <SECTNO>§ 714.37</SECTNO> <SUBJECT>Instructions and forms.</SUBJECT> <P>The Deputy Administrator shall cause to be prepared and issued such instructions and forms as are necessary for carrying out the regulations in the part.</P> </SECTION> <SECTION> <SECTNO>§ 714.38</SECTNO> <SUBJECT>Who may claim refund.</SUBJECT> <P>Claim for refund may be made by:</P> <P>(a) Any person who was entitled to share in the price or consideration received by the producer with respect to the marketing of a commodity from which a deduction was made for the penalty and bore the burden of such deduction in whole or in part.</P> <P>(b) Any person who was entitled to share in the commodity or the proceeds thereof, paid the penalty thereon in whole or in part and has not been reimbursed therefor.</P> <P>(c) Any person who was entitled to share in the commodity or the proceeds thereof and bore the burden of the penalty because he has reimbursed the person who paid such penalty.</P> <P>(d) Any person who, as buyer, paid the penalty in whole or in part in connection with the purchase of a commodity, was not required to collect or pay such penalty, did not deduct the amount of such penalty from the price paid the producer, and has not been reimbursed therefor.</P> <P>(e) Any person who paid the penalty in whole or in part as a surety on a <PRTPAGE P="53"/>bond given to secure the payment of penalties and has not been reimbursed therefor.</P> <P>(f) Any person who paid the whole or any part of the sum paid as a penalty with respect to a commodity included in a transaction which in fact was not a marketing of such commodity and has not been reimbursed therefor.</P> </SECTION> <SECTION> <SECTNO>§ 714.39</SECTNO> <SUBJECT>Manner of filing.</SUBJECT> <P>Claim for refund shall be filed in the county office on a form prescribed by the Deputy Administrator. If more than one person is entitled to file a claim, a joint claim may be filed by all such persons. If a separate claim is filed by a person who is a party to a joint claim, such separate claim shall not be approved until the interest of each person involved in the joint claim has been determined.</P> </SECTION> <SECTION> <SECTNO>§ 714.40</SECTNO> <SUBJECT>Time of filing.</SUBJECT> <P>Claim shall be filed within 2 years after the date payment was made to the Secretary. The date payment was made shall be deemed to be the date such payment was deposited in the general fund of the Treasury as shown on the certificate of deposit on which such payment was scheduled.</P> </SECTION> <SECTION> <SECTNO>§ 714.41</SECTNO> <SUBJECT>Statement of claim.</SUBJECT> <P>The claim shall show fully the facts constituting the basis of the claim; the name and address of and the amount claimed by every person who bore or bears any part or all of the burden of such penalty; and the reasons why such penalty is claimed to have been erroneously, illegally, or wrongfully collected. It shall be the responsibility of the county committee to determine that any person who executes a claim as agent or fiduciary is properly authorized to act in such capacity. There should be attached to the claim all pertinent documents with respect to the claim or duly authenticated copies thereof.</P> </SECTION> <SECTION> <SECTNO>§ 714.42</SECTNO> <SUBJECT>Designation of trustee.</SUBJECT> <P>Where there is more than one claimant and all the claimants desire to appoint a trustee to receive and disburse any payment to be made to them with respect to the claim, they shall be permitted to appoint a trustee. The person designated as trustee shall execute the declaration of trust.</P> </SECTION> <SECTION> <SECTNO>§ 714.43</SECTNO> <SUBJECT>Recommendation by county committee.</SUBJECT> <P>Immediately upon receipt of a claim, the date of receipt shall be recorded on the face thereof. The county committee shall determine, on the basis of all available information, if the data and representations on the claim are correct. The county committee shall recommend approval or disapproval of the claim, and attach a statement to the claim, signed by a member of the committee, giving the reasons for their action. After the recommendation of approval or disapproval is made by the county committee, the claim shall be promptly sent to the State committee.</P> </SECTION> <SECTION> <SECTNO>§ 714.44</SECTNO> <SUBJECT>Recommendation by State committee.</SUBJECT> <P>A representative of the State committee shall review each claim referred by the county committee. If a claim is sent initially to the State committee, it shall be referred to the appropriate county committee for recommendation as provided in § 714.43 prior to action being taken by the State committee. Any necessary investigation shall be made. The State committee shall recommend approval or disapproval of the claim, attaching a statement giving the reasons for their action, which shall be signed by a representative of the State committee. After recommending approval or disapproval, the claim shall be promptly sent to the Deputy Administrator.</P> </SECTION> <SECTION> <SECTNO>§ 714.45</SECTNO> <SUBJECT>Approval by Deputy Administrator.</SUBJECT> <P>The Deputy Administrator shall review each claim forwarded to him by the State committee to determine whether, (a) the penalty was erroneously, illegally, or wrongfully collected, (b) the claimant bore the burden of the payment of the penalty, (c) the claim was timely filed, and (d) under the applicable law and regulations the claimant is entitled to a refund. If a claim is filed initially with the Deputy Administrator, he shall obtain the recommendations of the county committee and the State committee if he deems such action necessary in <PRTPAGE P="54"/>arriving at a proper determination of the claim. The claimant shall be advised in writing of the action taken by the Deputy Administrator. If disapproved, the claimant shall be notified with an explanation of the reasons for such disapproval.</P> </SECTION> <SECTION> <SECTNO>§ 714.46</SECTNO> <SUBJECT>Certification for payment.</SUBJECT> <P>An officer or employee of the Department of Agriculture authorized to certify public vouchers for payment shall, for and on behalf of the Secretary of Agriculture, certify to the Secretary of the Treasury of the United States for payment all claims for refund which have been approved.</P> </SECTION> </PART> <PART> <EAR>Pt. 717</EAR> <HD SOURCE="HED">PART 717—HOLDING OF REFERENDA</HD> <CONTENTS> <SUBJGRP> <HD SOURCE="HED">General</HD> <SECHD>Sec.</SECHD> <SECTNO>717.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>717.2</SECTNO> <SUBJECT>Supervision of referenda and prescribed method of balloting.</SUBJECT> <SECTNO>717.3</SECTNO> <SUBJECT>Voting eligibility.</SUBJECT> <SECTNO>717.4</SECTNO> <SUBJECT>Register of eligible voters.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Holding Referenda at Polling Places</HD> <SECTNO>717.5</SECTNO> <SUBJECT>Community referendum committees.</SUBJECT> <SECTNO>717.6</SECTNO> <SUBJECT>Place for balloting.</SUBJECT> <SECTNO>717.7</SECTNO> <SUBJECT>Time of voting.</SUBJECT> <SECTNO>717.8</SECTNO> <SUBJECT>Notice of referendum.</SUBJECT> <SECTNO>717.9</SECTNO> <SUBJECT>Manner of voting.</SUBJECT> <SECTNO>717.10</SECTNO> <SUBJECT>Local arrangements for holding the referendum.</SUBJECT> <SECTNO>717.11</SECTNO> <SUBJECT>Issuing ballots.</SUBJECT> <SECTNO>717.12</SECTNO> <SUBJECT>Community referendum committee's canvass of ballots.</SUBJECT> <SECTNO>717.13</SECTNO> <SUBJECT>Community committee's reporting and record of results of referendum.</SUBJECT> <SECTNO>717.14</SECTNO> <SUBJECT>County committee's canvass of ballots.</SUBJECT> <SECTNO>717.15</SECTNO> <SUBJECT>County committee's reporting and record of results of the referendum.</SUBJECT> <SECTNO>717.16</SECTNO> <SUBJECT>Investigation as to correctness of summary of the referendum.</SUBJECT> <SECTNO>717.17</SECTNO> <SUBJECT>State committee's reporting and record of result of the referendum.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Holding Referenda by Mail Ballot</HD> <SECTNO>717.18</SECTNO> <SUBJECT>Issuing ballots.</SUBJECT> <SECTNO>717.19</SECTNO> <SUBJECT>Manner of voting.</SUBJECT> <SECTNO>717.20</SECTNO> <SUBJECT>Receiving and tabulating voted ballots.</SUBJECT> <SECTNO>717.21</SECTNO> <SUBJECT>Canvassing voted ballots.</SUBJECT> <SECTNO>717.22</SECTNO> <SUBJECT>Reporting and record of result of the referendum.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Miscellaneous</HD> <SECTNO>717.23</SECTNO> <SUBJECT>Applicability of this part to Puerto Rico.</SUBJECT> <SECTNO>717.24</SECTNO> <SUBJECT>Result of referendum.</SUBJECT> <SECTNO>717.25</SECTNO> <SUBJECT>Disposition of ballots and records.</SUBJECT> <SECTNO>717.26</SECTNO> <SUBJECT>Applicability.</SUBJECT> </SUBJGRP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Secs. 312, 317, 336, 343, 344a, 358, 376, 52 Stat. 46, as amended; 79 Stat. 66, as amended; 52 Stat. 55, as amended, 56, as amended; 79 Stat. 1197, as amended; 55 Stat. 88 as amended; 52 Stat. 66, as amended; 7 U.S.C. 1312, 1314c, 1336, 1343, 1344b, 1358, 1376.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>33 FR 18345, Dec. 11, 1968, unless otherwise noted.</P> </SOURCE> <SUBJGRP> <HD SOURCE="HED">General</HD> <SECTION> <SECTNO>§ 717.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>In determining the meaning of the provisions in this part, unless the context indicates otherwise, words importing the singular include and apply to several persons or things, words importing the plural include the singular, words importing the masculine gender include the feminine as well, and words used in the present tense include the future as well as the present.</P> <P>(a) <E T="03">General terms.</E> The definitions in part 719 of this chapter shall apply to this part. The provisions of part 720 of this chapter concerning the expiration of time limitations shall apply to this part.</P> <P>(b) <E T="03">Act.</E> The Agricultural Adjustment Act of 1938 and any amendments or supplements thereto.</P> <P>(c) <E T="03">Referendum community.</E> For referenda conducted by mail ballot, the entire county shall be the referendum community. For referenda conducted at polling places, the referendum community shall conform with the community established by the State committee for purposes of elective areas under the regulations in the subpart—Selection and Functions of Agricultural Stabilization and Conservation County and Community Committees in part 7, subtitle A, of this title (§ 7.7, 33 FR 12955), as amended from time to time: <E T="03">Provided,</E> That a referendum community may be composed of an area differing from the community so established in the following cases:</P> <P>(1) A referendum community may be established by the county committee, with the approval of a representative of the State committee, to conform to a <PRTPAGE P="55"/>political township, a local voting precinct for purposes of general elections, or a combination of such townships or precincts;</P> <P>(2) A referendum community may be established by the county committee, if it determines eligible producers will be given a convenient place to vote, which consists of a combination of a community with less than 25 farms on which there are producers eligible to vote, with one or more communities; and</P> <P>(3) The entire county shall be the referendum community in counties with less than 100 farms on which there are producers eligible to vote unless the county committee, with the approval of the State committee, determines that more than one referendum community is needed in the county.</P> <FP>The county committee shall maintain in the county office, and make available for public inspection, a descriptive list of the referendum communities established for the county for referenda conducted at polling places.</FP> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 1969]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.2</SECTNO> <SUBJECT>Supervision of referenda and prescribed method of balloting.</SUBJECT> <P>(a) <E T="03">Supervision of referenda.</E> The Deputy Administrator shall be in charge of and responsible for conducting each referendum required by the Act. Each State committee shall be in charge of and responsible for conducting such referendum in its State. Each county committee shall be responsible for the proper holding of such referendum in its county. It shall be the duty of the Deputy Administrator and of each committee to conduct each referendum by secret ballot in a fair, unbiased, and impartial manner in accordance with this part.</P> <P>(b) <E T="03">Prescribed method of balloting.</E> Each referendum held under this part shall be by mail ballot unless the Administrator, FSA, or the Deputy Administrator prescribes that a particular referendum shall be held at polling places.</P> </SECTION> <SECTION> <SECTNO>§ 717.3</SECTNO> <SUBJECT>Voting eligibility.</SUBJECT> <P>(a) <E T="03">Statutory requirements</E>—(1) <E T="03">Tobacco quotas proclaimed on an acreage basis under section 312</E>(<E T="03">a</E>) <E T="03">of the Act.</E> Within 30 days after the proclamation under section 312(a) of the Act of national marketing quotas on an acreage basis for any kind of tobacco for the next 3 succeeding marketing years, there shall be a referendum under section 312(c) of the Act of farmers engaged in the production of the crop of such tobacco harvested immediately prior to the holding of the referendum to determine whether such farmers are in favor of or opposed to such quotas for the 3-year period. If more than one-third of the farmers voting oppose such quotas, the quotas so proclaimed for the 3-year period shall not be in effect: <E T="03">Provided,</E> That such referendum result shall not preclude the proclamation of national marketing quotas for such kind of tobacco for the next 3 succeeding marketing years subject to a referendum as required under this paragraph. If the referendum results in approval of quotas for the 3-year period, no further referendum applicable to such quotas shall be held (i) unless a new proclamation during the 3-year period is made pursuant to subdivision (3) of section 312(a) of the Act in which case a referendum shall be held as provided in this paragraph (a)(1)(i) of this section, or (ii) unless quotas on an acreage-poundage basis are established pursuant to section 317(c) of the Act, in which case a special referendum shall be held as provided in paragraph (a)(2) of this section.</P> <P>(2) <E T="03">Tobacco quotas proclaimed on an acreage-poundage basis under section 317</E>(<E T="03">c</E>) <E T="03">of the Act.</E> During the first or second marketing year of the 3-year period for which marketing quotas for any kind of tobacco are in effect on an acreage basis, if the Secretary, under section 317(c) of the Act, determines that marketing quotas on an acreage-poundage basis would result in a more effective program, at the time of the next announcement of the amount of the marketing quota on an acreage basis, the Secretary shall also announce the national acreage allotment and national average yield goal. Within 45 days after such announcement of acreage-poundage quotas there shall be a special referendum under section 317(c) of the Act of farmers engaged in the production of the kind of tobacco of the most recent crop to determine <PRTPAGE P="56"/>whether such farmers favor the establishment of marketing quotas on an acreage-poundage basis for the next 3 marketing years. If more than two-thirds of the farmers voting in the special referendum favor marketing quotas on an acreage-poundage basis, such quotas shall be in effect for the next 3 marketing years and the marketing quotas on an acreage basis shall cease to be in effect at the beginning of such 3-year period and no further special referendum applicable to such 3-year period shall be held. If marketing quotas on an acreage-poundage basis are not favored by more than two-thirds of the farmers voting in the special referendum, marketing quotas on an acreage basis as previously proclaimed shall continue in effect.</P> <P>(3) <E T="03">Tobacco quotas proclaimed on an acreage-poundage basis under section 317</E>(<E T="03">d</E>) <E T="03">of the Act.</E> If marketing quotas on an acreage-poundage basis have been made effective for a kind of tobacco, the Secretary shall proclaim a national marketing quota for such kind of tobacco for the next 3 succeeding marketing years if the marketing year is the last year of 3 consecutive years for which marketing quotas previously proclaimed will be in effect. Such proclamation may be on an acreage-poundage basis or on an acreage basis. Within 30 days after such proclamation, there shall be a referendum under section 312(c) of the Act of farmers engaged in the production of the crop of such kind of tobacco harvested immediately prior to the holding of the referendum to determine whether such farmers are in favor of or opposed to such quotas for the next 3 succeeding marketing years. If more than one-third of the farmers voting oppose such quotas, the quotas so proclaimed for the 3-year period shall not be in effect: <E T="03">Provided,</E> That such referendum result shall not preclude the proclamation of national marketing quotas for such kind of tobacco for the next 3 succeeding marketing years under section 312(a) of the Act subject to a referendum thereon as provided in paragraph (a)(1) of this section. If a referendum results in approval of quotas for 3 marketing years on an acreage basis, no further referendum applicable to such 3 marketing years shall be held except as may be required under section 317(c) of the Act. If a referendum results in approval of quotas for 3 marketing years on an acreage-poundage basis, no further referendum applicable to such 3 marketing years shall be held.</P> <P>(4) <E T="03">Tobacco quotas proclaimed but disapproved in 3 successive years.</E> Under section 312(a)(4) of the Act, if producers have disapproved national marketing quotas for a kind of tobacco in referenda held in 3 successive years subsequent to 1952, a national marketing quota shall not be proclaimed for any marketing year within the 3-year period for which quotas were disapproved unless prior to November 10 of the marketing year, one-fourth or more of the farmers engaged in the production of the crop of tobacco harvested in the calendar year in which such marketing year begins petition the Secretary to proclaim a national marketing quota for each of the next 3 succeeding marketing years.</P> <P>(5) [Reserved]</P> <P>(6) <E T="03">Extra long staple cotton quotas.</E> Not later than December 15 following the proclamation of a national quota for extra long staple cotton there shall be a referendum under section 343 of the Act, of farmers engaged in the production of extra long staple cotton in the calendar year in which the referendum is held to determine whether such farmers are in favor of or opposed to the quota for the next marketing year. If more than one-third of the farmers voting in the referendum oppose the quota, such quota shall not be in effect.</P> <P>(7) [Reserved]</P> <P>(8) <E T="03">Rice quotas.</E> Within 30 days after the proclamation of a national marketing quota for rice there shall be a referendum under section 354(b) of the Act of farmers engaged in the production of the immediately preceding crop of rice to determine whether such farmers are in favor of or opposed to the quota for the next marketing year. If more than one-third of the farmers voting in the referendum oppose the quota, such quota shall not be in effect.</P> <P>(9) <E T="03">Peanut quotas.</E> Not later than December 15 of each calendar year there shall be a referendum under section 358(b) of the Act of farmers engaged in <PRTPAGE P="57"/>the production of peanuts in the calendar year in which the referendum is held to determine whether such farmers are in favor of or opposed to marketing quotas with respect to the crops of peanuts produced in the 3 calendar years immediately following the year in which the referendum is held. If more than one-third of the farmers voting in the referendum oppose such quotas, the quotas so proclaimed shall not be in effect: <E T="03">Provided,</E> That such referendum result shall not preclude the proclamation of quotas in the next calendar year for a 3-year period subject to a referendum as required under this paragraph. If quotas are favored, no further referendum with respect to the 3-year period shall be held.</P> <P>(b) <E T="03">Farmers engaged in the production of a commodity.</E> For purposes of referenda with respect to marketing quotas for tobacco, extra long staple cotton, rice and peanuts the phrase “farmers engaged in the production of a commodity” includes any person who is entitled to share in a crop of the commodity, or the proceeds thereof because he shares in the risks of production of the crop as an owner, landlord, tenant, or sharecropper (landlord whose return from the crop is fixed regardless of the amount of the crop produced is excluded) on a farm on which such crop is planted in a workmanlike manner for harvest: <E T="03">Provided,</E> That any failure to harvest the crop because of conditions beyond the control of such person shall not affect his status as a farmer engaged in the production of the crop. In addition, the phrase “farmers engaged in the production of a commodity” also includes each person who it is determined would have had an interest as a producer in the commodity on a farm for which a farm allotment for the crop of the commodity was established and no acreage of the crop was planted but an acreage of the crop was regarded as planted for history acreage purposes under the applicable commodity regulations.</P> <P>(c) <E T="03">Special conditions applicable to peanuts and rice</E>—(1) <E T="03">Peanuts.</E> In the case of a referendum for marketing quotas for peanuts, farmers engaged in the production of peanuts as determined under paragraph (b) of this section shall not be eligible to vote in the referendum if the farm does not have any production of peanuts subject to marketing quotas. Under section 359(b) of the Act, marketing quotas are not applicable to peanuts produced on any farm on which the acreage harvested for nuts is 1 acre or less provided the producers who share in the peanuts produced on such farm do not share in the peanuts produced on any other farm. Under section 359(b) of the Act, marketing quotas are not applicable to peanuts which it is established (i) were not picked or threshed either before or after marketing from the farm, or (ii) were marketed by the producer before drying or removal of moisture from such peanuts either by natural or artificial means for consumption exclusively as boiled peanuts.</P> <P>(2) <E T="03">Rice.</E> In the case of a referendum for a marketing quota for rice, farmers engaged in the production of rice as determined under paragraph (b) of this section shall not be eligible to vote in the referendum if the farm is not subject to marketing quotas. Under section 353(d) of the Act, marketing quotas are not applicable (i) to nonirrigated rice produced on any farm on which the acreage planted to nonirrigated rice does not exceed 3 acres, or (ii) to rice produced outside the continental United States.</P> <P>(d) [Reserved]</P> <P>(e) <E T="03">One vote limitation.</E> Each person eligible to vote in a particular marketing quota referendum shall be entitled to only one vote in such referendum regardless of the number of farms in which such person is interested or the number of communities, counties, or States in which farms are located in which farms such person is interested: <E T="03">Provided,</E> That:</P> <P>(1) The individual members of a partnership shall each be entitled to one vote, but the partnership as an entity shall not be entitled to vote;</P> <P>(2) An individual eligible voter shall be entitled to one vote even though he is interested in an entity (including but not limited to a corporation) which entity is also eligible to vote;</P> <P>(3) A person shall also be entitled to vote in each instance of his capacity as a fiduciary (including but not limited to a guardian, administrator, executor or trustee) if in such fiduciary capacity <PRTPAGE P="58"/>he is eligible to vote but the person for whom he acts as a fiduciary shall not be eligible to vote.</P> <P>(f) <E T="03">Joint and family interest.</E> Where several persons, such as members of a family, have participated or will participate in the production of a commodity under the same lease or cropping agreement, only the person or persons who signed the lease or agreement, or agreed to an oral lease or agreement, shall be eligible to vote. Where two or more persons have produced or will produce a commodity as joint tenants, tenants in common, or owners of community property, each such person shall be entitled to one vote if otherwise eligible. The eligibility of one spouse does not affect the eligibility of the other spouse.</P> <P>(g) <E T="03">Minors.</E> A minor shall be entitled to one vote if he is otherwise eligible and is 18 years of age or older when he votes.</P> <P>(h) [Reserved]</P> <P>(i) <E T="03">Interpretation.</E> In the case of any commodity on a farm where no acreage of the commodity is actually planted but an acreage of the commodity is regarded as planted under applicable regulations of the Department, persons on the farm who it is determined would have had an interest in the commodity as a producer if an acreage of the commodity had been actually planted shall be eligible to vote in the referendum.</P> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 2, 36 FR 12730, July 7, 1971]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.4</SECTNO> <SUBJECT>Register of eligible voters.</SUBJECT> <P>Prior to the date of the referendum a register shall be prepared by the county office manager listing the name and address of each known eligible voter. For referenda conducted at polling places a register shall be prepared for each referendum community. For referenda conducted by mail ballot the entire county is considered to be the referendum community and one register shall be prepared for the county.</P> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Holding Referenda at Polling Places</HD> <SECTION> <SECTNO>§ 717.5</SECTNO> <SUBJECT>Community referendum committees.</SUBJECT> <P>(a) <E T="03">Where one referendum is to be conducted.</E> Except where the entire county is to be considered a referendum community, the county committee shall designate a community referendum committee for each referendum community. Each referendum committee shall consist of at least three regular members and one alternate. The membership of the referendum committee shall be chosen from among the farmers who reside in the community and who are eligible to vote in the referendum or who are community committeemen elected pursuant to the regulations in the subpart—Selection and Functions of Agricultural Stabilization and Conservation County and Community committees (part 7 of this title). The county committee shall name one member of the community referendum committee as chairman and another member thereof as vice chairman. The vice chairman shall act as the chairman in the event of the absence or incapacity of the chairman and the alternate shall serve on the committee in the place of any regular member who cannot serve. The community referendum committee shall be responsible for the proper holding of the referendum in its community in a fair, unbiased and impartial manner in accordance with this part. In counties where the entire county is treated as one referendum community, the county committee shall perform, in addition to its other duties, the duties of the community referendum committee.</P> <P>(b) <E T="03">Where two or more referenda are to be conducted.</E> Where two or more referenda are to be held in the county on the same day, the provisions of paragraph (a) of this section shall be applicable except that (1) the total number of farms on which there are producers eligible to vote in any one or more of such referenda shall be used to determine whether there are 100 or more farms on which there are producers who are eligible to vote in the referenda, and (2) each community referendum committee shall be chosen from among the farmers who reside in the community and who are eligible to vote in any of such referenda or who are community committeemen elected <PRTPAGE P="59"/>pursuant to the regulations in the subpart—Selection and Functions of Agricultural Stabilization and Conservation County and Community committees (part 7 of this title).</P> </SECTION> <SECTION> <SECTNO>§ 717.6</SECTNO> <SUBJECT>Place for balloting.</SUBJECT> <P>The county committee shall designate only one polling place for balloting in each referendum community. The polling place shall be one well known to and readily accessible to the persons in the community and shall be equipped and arranged so that each voter can mark and cast his ballot in secret and without coercion, duress, or interference of any sort whatsoever. Subject to the provisions of § 717.9(c) for absentee ballots, a farmer or producer eligible to vote, shall vote only at a polling place designated for the referendum community in which he was engaged in the production of the commodity for which the referendum is held.</P> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 2, 36 FR 12730, July 7, 1971]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.7</SECTNO> <SUBJECT>Time of voting.</SUBJECT> <P>There shall be no voting except on the day fixed for the holding of the referendum (except as provided in § 717.9(c) in the case of absentee ballots) and the day fixed for the holding of the referendum shall be the same in all neighborhoods, communities, counties, and States. The date for holding the referendum shall be determined by the Secretary in accordance with the provisions of law applicable thereto and stated in the notice of the referendum prescribed by him. The time that polls shall be opened and closed on the date fixed for holding the referendum in the States and Puerto Rico is as follows:</P> <GPOTABLE CDEF="s25,8,8" COLS="3" OPTS="L2"> <BOXHD> <CHED H="1">State</CHED> <CHED H="1">Polls to open a.m.</CHED> <CHED H="1">Polls to close p.m.</CHED> </BOXHD> <ROW> <ENT I="01">Alabama</ENT> <ENT>7:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Alaska</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Arizona</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Arkansas</ENT> <ENT>8:00</ENT> <ENT>6:30</ENT> </ROW> <ROW> <ENT I="01">California</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Colorado</ENT> <ENT>7:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Connecticut</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Delaware</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Florida</ENT> <ENT>7:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Georgia</ENT> <ENT>7:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Idaho</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Illinois</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Indiana</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Iowa</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Kansas</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Kentucky</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Louisiana</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Maine</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Maryland</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Massachusetts</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Michigan</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Minnesota</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Mississippi</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Missouri</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Montana</ENT> <ENT>8:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Nebraska</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Nevada</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">New Hampshire</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">New Jersey</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">New Mexico</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">New York</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">North Carolina</ENT> <ENT>7:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">North Dakota</ENT> <ENT>8:00</ENT> <ENT>9:00</ENT> </ROW> <ROW> <ENT I="01">Ohio</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Oklahoma</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Oregon</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Pennsylvania</ENT> <ENT>8:00</ENT> <ENT>9:00</ENT> </ROW> <ROW> <ENT I="01">Rhode Island</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">South Carolina</ENT> <ENT>7:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">South Dakota</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Tennessee</ENT> <ENT>8:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Texas</ENT> <ENT>8:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Utah</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Vermont</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> <ROW> <ENT I="01">Virginia</ENT> <ENT>7:00</ENT> <ENT>7:00</ENT> </ROW> <ROW> <ENT I="01">Washington</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">West Virginia</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Wisconsin</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Wyoming</ENT> <ENT>8:00</ENT> <ENT>8:00</ENT> </ROW> <ROW> <ENT I="01">Puerto Rico</ENT> <ENT>8:00</ENT> <ENT>6:00</ENT> </ROW> </GPOTABLE> <FP>The times listed in this section shall be the local time in effect for the area in which the polling place is located.</FP> </SECTION> <SECTION> <SECTNO>§ 717.8</SECTNO> <SUBJECT>Notice of referendum.</SUBJECT> <P>(a) <E T="03">Posting a notice.</E> The county committee shall give public notice of the referendum in each referendum community by posting a notice at one or more places open to the public within such community prior to the date of the referendum. Such notice shall be on a form prescribed by the Deputy Administrator and shall state the commodity or commodities and marketing year, or years, or crops for which the referendum is to be held, the location of the polling place in the community, the date of the referendum, and the hours when the polls will be opened and closed. The county executive director is authorized to sign such notice on behalf of the county committee.</P> <P>(b) <E T="03">Use of agencies of public information.</E> The county committee and community referendum committees shall <PRTPAGE P="60"/>utilize, to the extent practicable (without advertising expense), all available agencies of public information, including newspapers, radio, television and other means, to give persons in the county public notice of the day and hours of voting, the location of polling places, and the rules governing eligibility to vote. Such notice should be given as soon as practicable after the arrangements for holding the referendum in the county have been made.</P> </SECTION> <SECTION> <SECTNO>§ 717.9</SECTNO> <SUBJECT>Manner of voting.</SUBJECT> <P>(a) <E T="03">Secret ballot.</E> The voting in the referendum shall be by secret ballot. Each voter shall, at the time he is handed the form on which to cast his ballot, be instructed to mark his ballot form so as to indicate clearly how he votes and in such manner that no one else shall see how he votes and then to fold his ballot and place it in the ballot box without allowing anyone else to see how he voted. A suitable place where each voter may mark and cast his ballot in secret and without coercion, duress, or interference of any sort whatever, shall be provided in each polling place. Every unchallenged ballot shall be placed in the ballot box by the person who voted it. The fact that a voter fails to fold a ballot placed in the ballot box shall not invalidate it. It shall be the duty of each community referendum committee to see that no device of any sort whatever is used whereby any voter's ballot may be identified except as provided in this part in the case of a challenged ballot or an absentee ballot.</P> <P>(b) <E T="03">Voting by proxy prohibited.</E> There shall be no voting by proxy or agent, or in any manner except by the eligible voter (or the challenged voter under paragraph (d) of this section) personally depositing in the ballot box his ballot as marked by him (except as provided in the case of an absentee ballot), but a duly authorized officer of a corporation, association, or other legal entity, may cast its vote.</P> <P>(c) <E T="03">Absentee ballots.</E> Any person who will not be present on the day of the referendum in the county in which he is eligible to vote or who will be prevented from voting in person on the day of the referendum because of physical incapacity, or whose religious belief forbids him from voting on the day of the referendum, may obtain prior to the date of the referendum, one ballot from a State or county FSA office conveniently situated for him, or from the Commodity Programs Division, FSA, Department of Agriculture, Washington, D.C., and cast an absentee ballot. The office so issuing the ballot form shall endorse on the reverse side thereof a statement in substantially the following form identifying the place in which it was issued and the county to which it will be mailed or delivered, initialed and dated by the person issuing such form.</P> <EXTRACT> <P>Issued in ____ County ____ State, or by ________ State FSA Office, or by ________ Division, FSA, Washington, D.C., for use in ____ County, ____ State.</P> </EXTRACT> <FP>The issuing office shall keep a register showing for each ballot form so issued by it to be voted absentee, the name and address to whom issued, the date of issuance, and the county and State in which the ballot is to be voted, and the name and title of the person who issued the ballot. The person to whom the ballot is issued shall mark the ballot so as to indicate clearly how he votes and place the ballot in a plain envelope which shall be marked clearly with the words “Absentee Ballot,” sealed and inserted in another envelope which shall be marked clearly with the voter's name and return address, sealed and delivered, or mailed, postage paid, to the county committee for the county in which he is eligible to vote. All absentee ballots must, in order to be accepted, reach the county office for the county in which the voter is eligible to vote by not later than the hour for closing the polls in the county on the day of the referendum. No such ballot shall be counted unless the voter's name and address appear on the envelope and it is determined that he is eligible to vote.</FP> <P>(d) <E T="03">Challenged ballots.</E> The community referendum committee or any member thereof shall challenge the eligibility of any person to vote in the referendum where (1) the community referendum committee or any member thereof is unable to determine that the person is eligible to vote in the referendum in <PRTPAGE P="61"/>the community, or (2) the community referendum committee or any member thereof has reason to believe that such person has previously voted in the referendum in another community in the same or another county in person or by mail, or (3) the person's name and address have not been entered on the register of eligible voters, prior to its delivery to the referendum committee, unless the referendum committee is satisfied that the person is eligible to vote. In every case where the eligibility of the voter is challenged, his ballot form, after being marked by the challenged person so as to show how he votes, but in such manner that no one else sees how he votes, shall be folded and placed by him (or by a member of the committee if he refuses) in an envelope, which shall then be sealed and placed in another envelope, identified with his name and address, the word “Challenged” and a statement of the reason for the challenge, and shall then be placed in the ballot box. The county committee shall make an investigation in each case of controversy or dispute regarding the eligibility of a voter to vote in the referendum. In each case of a challenged ballot the eligibility of the person to vote in the referendum shall be determined by the county committee as soon as may be possible after the polls are closed and before the time for forwarding to the State committee the county summary of ballots. If it is determined that the person whose vote was challenged is eligible to vote, the sealed envelope containing the ballot shall be placed with the challenged ballot of every other person found to be eligible to vote until all challenged ballots have been passed upon by the county committee. If it is determined that the person whose vote was challenged is not eligible, the sealed envelope shall be marked “Not eligible” and signed by a member of the county committee and shall not be opened. When all of the challenged ballots have been passed upon by the county committee, the challenged ballots which were cast by eligible voters shall be opened and tabulated on the county summary of ballots, but no disclosure shall be made as to how any particular person voted.</P> <P>(e) <E T="03">Ballot box.</E> Each polling place shall be furnished with a suitable ballot box. Any container of sufficient size so arranged that no ballot can be read or removed without breaking seals on the container will be suitable. When strip adhesive paper or corresponding seals are used on the ballot box, such seals shall be signed or initialed by the chairman or a member of the community referendum committee so that breaking or replacing the seal will so destroy or affect the identifying marks as to show that the seal has been tampered with.</P> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 1969]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.10</SECTNO> <SUBJECT>Local arrangements for holding the referendum.</SUBJECT> <P>The county committee shall make all arrangements for the proper holding of the referendum in accordance with this part prior to the date of the referendum. The county committee shall instruct each community referendum committee concerning its duties so that each member of the committee understands his duties and the duties of the committee in all respects, with particular emphasis as to (a) issuing ballot forms, (b) challenged ballots, (c) recording votes, (d) tabulating ballots, and (e) certifying results of the referendum in the referendum community. The county executive director shall furnish each community referendum committee an adequate supply of forms prior to the time the polls in the county are opened for the acceptance of ballots, by delivering the ballot forms and the forms for the community summary of ballots to each chairman of the several community referendum committees.</P> </SECTION> <SECTION> <SECTNO>§ 717.11</SECTNO> <SUBJECT>Issuing ballots.</SUBJECT> <P>The community referendum committee shall open the polling place for the issuance of ballot forms and the casting of ballots at the time designated and shall thereafter until the time when the polls are required to be closed and the casting of ballots discontinued issue a ballot to each person who is eligible to vote and applies for a ballot and to each person who claims to be eligible to vote and insists upon voting even though his eligibility to <PRTPAGE P="62"/>vote is challenged by a member of the committee. The community referendum committeeman who issued the ballot form shall immediately enter on the register of voters opposite the name and address of the person voting, a record of the issuance of the ballot, the casting of the ballot, and any challenge of the eligibility of the person casting the ballot. Ballot forms shall be issued and ballots placed in the ballot box while at least two members serving on the community referendum committee are physically present in the polling place and in position to see each ballot form as it is issued and each ballot as it is placed in the ballot box.</P> </SECTION> <SECTION> <SECTNO>§ 717.12</SECTNO> <SUBJECT>Community referendum committee's canvass of ballots.</SUBJECT> <P>Immediately after the polls are closed, the community referendum committee shall open the ballot box and canvass the ballots cast. The canvass of the ballots shall be kept open to the public. A ballot shall be considered as a spoiled ballot if it is mutilated or marked in such a way that it is not possible to determine with certainty how the ballot was intended to be counted on a particular question. The envelope containing the challenged ballots shall not be opened. The total number of ballots issued as shown on the register of voters shall be determined and the total number of ballots cast, including the spoiled and challenged ballots, shall be determined. The number of ballots cast in favor of and the number of ballots cast in opposition to the question on which the referendum was held shall be determined. The spoiled ballots and challenged ballots shall not be considered in favor of or against the question. If any member of the community referendum committee should see or learn how any person besides himself voted, whether or not the ballot was challenged, spoiled, or otherwise, he shall not disclose such knowledge to a fellow committeeman or any other person except in an investigation conducted under this part.</P> </SECTION> <SECTION> <SECTNO>§ 717.13</SECTNO> <SUBJECT>Community committee's reporting and record of results of referendum.</SUBJECT> <P>The community referendum committee shall notify the county committee by telephone, telegraph, messenger, or in person of the preliminary count of the votes on each question and of the number of spoiled and challenged ballots, as soon as may be possible. All the spoiled ballots shall be placed in an envelope and sealed and marked with the initials of the chairman (or vice chairman) of the community referendum committee and the designation “Spoiled Ballots” followed by the number of spoiled ballots and the names of the community, the county and the State. The community referendum committee shall execute the certification as to the accuracy of the register of eligible voters and ballots cast. The community referendum committee shall then prepare and execute the community summary of ballots and post one copy thereof, as soon as it is executed, in a conspicuous place at the polling place, so that it will remain posted and accessible to the public for at least 3 calendar days after the holding of the referendum. The community referendum committee shall seal the voted ballots, including those challenged and spoiled, the register of eligible voters and ballots cast, and the community summary of ballots, in one or more envelopes appropriately identified by the names of the community, the county, and the State, and the nature of the referendum and the date on which it was held, and deliver them to the county committee not later than 9 a.m., local time, on the second calendar day after the date of the referendum, together with the unused ballot and other forms. The chairman (or vice chairman) of the community referendum committee shall be responsible for the safe delivery of such reports, ballots, and forms to the county committee.</P> </SECTION> <SECTION> <SECTNO>§ 717.14</SECTNO> <SUBJECT>County committee's canvass of ballots.</SUBJECT> <P>The county committee, after the closing of the polls, shall open and canvass the absentee ballots received and determine the eligibility of each voter. If any person voting absentee is found <PRTPAGE P="63"/>to be ineligible to vote, or the ballot is so mutilated or marked that it is not possible to determine with certainty how the person intended to vote, such ballot shall not be counted as for or against the question in the referendum. The county committee shall meet and pass upon the challenged ballots as soon as may be reasonably possible after the challenged ballots are received from the community referendum committees, but not later than 4 calendar days after the day of the referendum. The result of the referendum in each community shall be reviewed and summarized as soon as may be reasonably possible after the records, ballots, and forms are received from the several community referendum committees. Every meeting of the county committee for the purpose of canvassing the ballots cast and reviewing and tabulating the results of the referendum shall be open to the public. No member of the county committee who learns how any person besides himself voted, whether the ballot was an absentee ballot, challenged, spoiled, or otherwise, shall disclose such knowledge to any fellow committeeman or other person except in an investigation conducted under this part.</P> </SECTION> <SECTION> <SECTNO>§ 717.15</SECTNO> <SUBJECT>County committee's reporting and record of results of the referendum.</SUBJECT> <P>The county committee shall notify the State committee by telephone, telegraph, or messenger (who may be a member of the county committee), as to the preliminary count of the votes on each question and the number of challenged ballots by the several community referendum committees as soon as possible. The county committee shall, as soon as may be reasonably possible, but in no event later than 4 calendar days after the date of the referendum, have prepared and certified the county summary of ballots. Such summary shall be prepared and certified in triplicate, one copy of which shall be sent to the State committee, one copy posted for 30 calendar days in a conspicuous place accessible to the public in or near the office of the county committee, and one copy filed in the office of the county committee and kept available for public inspection. One copy of each community summary shall likewise be posted for 30 calendar days in a conspicuous place accessible to the public in or near the office of the county committee.</P> </SECTION> <SECTION> <SECTNO>§ 717.16</SECTNO> <SUBJECT>Investigation as to correctness of summary of the referendum.</SUBJECT> <P>The county committee shall make an investigation in each case of a dispute or challenge regarding the correctness of the summary of the referendum in a community. No dispute or challenge shall be investigated by the county committee unless it is brought to its attention within 3 calendar days after the date on which the referendum was held. The county committee shall promptly decide the dispute or the challenge and report its findings to the State committee within 5 calendar days after the holding of the referendum and send by certified mail, or deliver in person, to the office of the State committee all voted ballots, register forms, and community summary sheets involved in the dispute or challenge.</P> </SECTION> <SECTION> <SECTNO>§ 717.17</SECTNO> <SUBJECT>State committee's reporting and record of result of the referendum.</SUBJECT> <P>The State committee for each State shall notify the Deputy Administrator by telegraph or telephone as to the preliminary count of the votes in the State as soon as the preliminary results of the referendum are made known to the State committee. The county summaries of ballots shall be summarized on the State summary of ballots as soon as possible, but in no event later than 7 calendar days after the date of the referendum, unless there is a dispute or challenge regarding the correctness of the summary for any county, in which case the State committee shall complete its investigation thereof, decide the dispute or challenge, and prepare the State summary accordingly within 14 calendar days after the date of the referendum. The State summary shall be prepared in triplicate and certified to by the State executive director. The original and one copy of the State summary shall be forwarded to the Director of <PRTPAGE P="64"/>the FSA Division having the responsibility for the commodity for which the referendum was held. One copy of the State summary shall be filed for a period of 5 years in the office of the State committee available for public inspection.</P> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 1969]</CITA> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Holding Referenda by Mail Ballot</HD> <SECTION> <SECTNO>§ 717.18</SECTNO> <SUBJECT>Issuing ballots.</SUBJECT> <P>The county committee shall furnish each person who is eligible to vote in a particular referendum a ballot suitable for mailing back to the office of the county committee. If a person who is eligible to vote in a particular referendum is not furnished a ballot, he may obtain one during the referendum period from the office of the county committee for the county in which he is eligible to vote or from any other FSA office where ballots are available, including the Commodity Programs Division, FSA, Department of Agriculture, Washington, D.C. When a ballot is issued from an FSA office other than the FSA office in the county in which the producer is eligible to vote in a particular referendum, the issuing office shall keep a register showing to whom it was issued, the person's address, the county and State in which the ballot is to be voted, and the name and title of the person who issued the ballot.</P> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 1969]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.19</SECTNO> <SUBJECT>Manner of voting.</SUBJECT> <P>(a) <E T="03">Voting procedure.</E> Each person to whom a ballot is issued by mail or in person may vote in the referendum by marking the ballot so as to indicate clearly how the vote is cast, placing the ballot in a plain envelope, sealing the envelope provided by FSA which is marked clearly with the voter's name and return address, signing the certification on such envelope or making his mark thereto (which mark shall be witnessed), sealing such envelope, and delivering or mailing the envelope to the offfice of the county committee for the county in which the person is eligible to vote.</P> <P>(b) <E T="03">Voting by proxy prohibited.</E> There shall be no voting by proxy or agent except as provided in § 717.3.</P> <SECAUTH>(Secs. 312, 317, 336, 343, 344, 354, 358, 375, 52 Stat. 46, as amended, 79 Stat. 66, 52 Stat. 55, as amended, 56, as amended, 79 Stat. 1197, 52 Stat. 61, as amended, 55 Stat. 88, as amended, 52 Stat. 66, as amended; 7 U.S.C. 1312, 1314c, 1336, 1343, 1344b, 1354, 1356, 1375)</SECAUTH> <CITA>[Amdt. 2, 36 FR 12730, July 7, 1971, as amended by Amdt. 4, 49 FR 24371, June 13, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.20</SECTNO> <SUBJECT>Receiving and tabulating voted ballots.</SUBJECT> <P>Ballots received at the county FSA office during the referendum period shall be placed immediately in a ballot box provided by the county executive director and so arranged that ballots cannot be read or removed without breaking the seal on the container. Voted ballots received by the county committee of the county in which the voter is eligible to vote during the period established for holding a particular referendum, shall be tabulated by the county committee. A ballot shall be considered to have been received during the referendum period if (a) in the case of a ballot delivered to the county committee, it was received in the office prior to the close of the work day on the final day of the referendum period, or (b) in the case of a mailed ballot, it was postmarked not later than midnight of the final day of the referendum period and was received in the county office prior to the start of canvassing the ballots. However, no such ballot shall be counted unless the voter signs the certification or his mark is witnessed on the returned envelope, and it is determined that he is eligible to vote in the particular referendum.</P> <SECAUTH>(Secs. 312, 317, 336, 343, 344, 354, 358, 375, 52 Stat. 46, as amended, 79 Stat. 66, 52 Stat. 55, as amended, 56, as amended, 79 Stat. 1197, 52 Stat. 61, as amended, 55 Stat. 88, as amended, 52 Stat. 66, as amended; 7 U.S.C. 1312, 1314c, 1336, 1343, 1344b, 1354, 1356, 1375)</SECAUTH> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 4, 49 FR 24371, June 13, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.21</SECTNO> <SUBJECT>Canvassing voted ballots.</SUBJECT> <P>(a) <E T="03">Time of canvassing.</E> The canvassing of voted ballots shall take place at the opening of the county office on the <PRTPAGE P="65"/>fifth day after the close of the referendum period. Ballots received after the start of tabulation, even though contained in envelopes that were post-marked prior to midnight of the final day of the referendum period, shall not be counted.</P> <P>(b) <E T="03">Canvassing by county committee.</E> The canvassing shall be in the presence of at least two members of the county committee and open to the public: <E T="03">Provided,</E> That if two or more counties have been combined and are served by one county office, the canvassing of ballots shall be conducted by at least one member of the county committee from each county served by the county office: <E T="03">Provided further,</E> That the State committee, or the State executive director if authorized by the State committee, may (1) designate the county executive director and a county or State FSA office employee to canvass the ballots and report the results, as provided in paragraph (c) and § 717.22, instead of two members of the county committee, when it is determined that the number of eligible voters for the commodity for which the referendum is being conducted is so limited that having two members of the county committee present for this function is impractical and (2) designate the county Executive Director and/or another county or State FSA office employee to canvass ballots in any emergency situation precluding at least two members of the county committee from being present to carry out the functions required in this section.</P> <P>(c) <E T="03">Manner of canvassing.</E> The canvassing of ballots shall follow the following procedure:</P> <P>(1) The ballot box shall be opened;</P> <P>(2) The envelopes from the ballot box shall be separated into three groups consisting of (i) unopened certification envelopes which do not have a proper signed certification, (ii) unopened certification envelopes from ineligible voters, and (iii) unopened certification envelopes from eligible voters;</P> <P>(3) The unopened certification envelopes from eligible voters shall be opened and plain envelopes removed and then shuffled to preserve the secrecy of the ballots contained in such plain envelopes;</P> <P>(4) The ballots shall be removed from such plain envelopes and tabulated. A ballot shall be considered as a spoiled ballot if it is mutilated or marked in such a way that it is not possible to determine with certainty how the ballot was intended to be counted on a particular question. The spoiled ballots shall not be considered in favor of or against the question.</P> <P>(5) The unopened certification envelopes which do not have a proper signed certification shall not be opened and shall not be considered in favor of or against the question.</P> <P>(6) The unopened certification envelopes from ineligible voters shall be considered as challenged ballots. The county committee shall determine the eligibility of the person to vote in the referendum. If determined to be eligible such envelopes shall be handled as provided under paragraphs (c)(3) and (4) of this section. If determined not to be eligible, such envelopes shall not be opened and shall not be considered in favor of or against the question.</P> <P>(d) <E T="03">Dispute or challenge.</E> A dispute or challenge with respect to any referendum held by mail ballot shall not be considered unless notification of such dispute or challenge is filed in writing with the county executive director of the county in which the alleged irregularity occurred within 3 days after the date of the canvassing of voted ballots. Such written notification of a dispute or challenge must identify each alleged instance in which the county committee erred when canvassing the ballots or tabulating the referendum results. The county committee shall determine the validity of the dispute or challenge and report its findings to the State committee within 3 working days after the final date for filing a dispute or challenge.</P> <CITA>[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 2, 36 FR 12730, July 7, 1971; Amdt. 3, 38 FR 12891, May 17, 1973; 51 FR 10609, Mar. 28, 1986; 52 FR 10727, Apr. 3, 1987]</CITA> </SECTION> <SECTION> <SECTNO>§ 717.22</SECTNO> <SUBJECT>Reporting and record of result of the referendum.</SUBJECT> <P>(a) <E T="03">County committee.</E> The county committee shall notify the State committee by telephone, telegraph, or messenger (who may be a member of the <PRTPAGE P="66"/>county committee), as to the preliminary count of the votes on each question and the number of challenged ballots as soon as possible. The county committee shall, as soon as may be reasonably possible, but in no event later than 4 calendar days after canvassing of the ballots, have prepared and certified the county summary of ballots. Such summary shall be prepared and certified in triplicate, one copy of which shall be sent to the State committee, one copy posted for 30 calendar days in a conspicuous place accessible to the public in or near the office of the county committee, and one copy filed in the office of the county committee and kept available for public inspection.</P> <P>(b) <E T="03">State committee.</E> The State committee for each State shall notify the Deputy Administrator by telephone or telegraph as to the preliminary count of the votes in the State as soon as the preliminary results of the referendum are made known to the State committee. The county summaries of ballots shall be summarized on the State summary of ballots as soon as possible, but in no event later than 7 calendar days after canvassing of the ballots, unless there is a dispute or challenge regarding the correctness of the summary for any county, in which case the State committee shall complete its investigation thereof, decide the dispute or challenge, and prepare the State summary accordingly within 14 calendar days after canvassing of the ballots. The State summary shall be prepared in triplicate and certified to by the State executive director. The original and one copy of the State summary shall be forwarded to the Director of the FSA Division having the responsibility for the commodity for which the referendum was held. One copy of the State summary shall be filed for a period of 5 years in the office of State committee available for public inspection.</P> <CITA>[Amdt. 1, 34 FR 12940, Aug. 9, 1969]</CITA> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Miscellaneous</HD> <SECTION> <SECTNO>§ 717.23</SECTNO> <SUBJECT>Applicability of this part to Puerto Rico.</SUBJECT> <P>The Caribbean Area Agricultural Stabilization and Conservation Committee shall be in charge of and responsible for conducting in Puerto Rico each referendum required by the Act. Insofar as applicable, the Caribbean Area ASC Committee shall perform all the duties and assume all the responsibilities otherwise required of State and county committees as provided in this part, except that (a) the Director, Agricultural Stabilization and Conservation Caribbean Area Office shall nominate for appointment by the Caribbean Area ASC Committee the members and alternates to serve on community referendum committees and shall establish the boundaries of referendum communities in such a manner that polling places therein will be conveniently located for the farmers eligible to vote in the referendum, and (b) following the canvass of the ballots, results of the referendum shall be reported to the Caribbean Area ASC Committee.</P> </SECTION> <SECTION> <SECTNO>§ 717.24</SECTNO> <SUBJECT>Result of referendum.</SUBJECT> <P>(a) <E T="03">Proclamation of result.</E> The final and official tabulation of the votes cast in the referendum shall be made by the Deputy Administrator and the result of the referendum will be publicly proclaimed and published in the <E T="04">Federal Register.</E> The State summaries and related papers shall be filed with such tabulation for a period of 5 years available for public inspection in the Department of Agriculture.</P> <P>(b) <E T="03">Unofficial announcements of result.</E> Each county committee is authorized to issue unofficial reports of the total “Yes” and “No” votes in its county to the press and the public. Each State committee is authorized to issue to the press and the public the unofficial result of the referendum in its State by counties as rapidly as the votes in the various counties are reported to it.</P> <P>(c) <E T="03">Investigations.</E> If the Deputy Administrator or the Secretary deems it necessary, the report of any community referendum committee, county committee, or State committee shall be reexamined and checked by such persons or agents as may be designated.</P> </SECTION> <SECTION> <PRTPAGE P="67"/> <SECTNO>§ 717.25</SECTNO> <SUBJECT>Disposition of ballots and rec-ords.</SUBJECT> <P>The county committee shall seal the voted ballots, challenged ballots found to be ineligible, spoiled ballots, unopened certification envelopes, register sheets, and community summaries for the county in one or more envelopes or packages, plainly marked with the identification of the referendum, the date, and the names of the county and State, and place them under lock in a safe place under the custody of the county office manager for a period of 30 calendar days after the date of the referendum. If no notice to the contrary is received by the end of such time, the voted ballots, challenged ballots, spoiled ballots, and unopened certification envelopes shall be destroyed, but the registers and community and county summary sheets and the register of absentee ballots shall be filed for a period of 5 years in the office of the county committee.</P> </SECTION> <SECTION> <SECTNO>§ 717.26</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>The regulations contained in this part shall be applicable to all referenda held pursuant to the Agricultural Adjustment Act of 1938, as amended.</P> </SECTION> </SUBJGRP> </PART> <PART> <EAR>Pt. 718</EAR> <HD SOURCE="HED">PART 718—PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General Provisions</HD> <SECHD>Sec.</SECHD> <SECTNO>718.1</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>718.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>718.3</SECTNO> <SUBJECT>State committee responsibilities.</SUBJECT> <SECTNO>718.4</SECTNO> <SUBJECT>Authority for farm entry and providing information.</SUBJECT> <SECTNO>718.5</SECTNO> <SUBJECT>Rule of fractions.</SUBJECT> <SECTNO>718.6</SECTNO> <SUBJECT>Controlled substance.</SUBJECT> <SECTNO>718.7</SECTNO> <SUBJECT>Furnishing maps.</SUBJECT> <SECTNO>718.8</SECTNO> <SUBJECT>Administrative county.</SUBJECT> <SECTNO>718.9</SECTNO> <SUBJECT>Signature requirements.</SUBJECT> <SECTNO>718.10</SECTNO> <SUBJECT>Time limitations.</SUBJECT> <SECTNO>718.11</SECTNO> <SUBJECT>Disqualification due to federal crop insurance fraud.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Determination of Acreage and Compliance</HD> <SECTNO>718.101</SECTNO> <SUBJECT>Measurements.</SUBJECT> <SECTNO>718.102</SECTNO> <SUBJECT>Acreage reports.</SUBJECT> <SECTNO>718.103</SECTNO> <SUBJECT>Late-filed reports.</SUBJECT> <SECTNO>718.104</SECTNO> <SUBJECT>Revised reports.</SUBJECT> <SECTNO>718.105</SECTNO> <SUBJECT>Tolerances, variances, and adjustments.</SUBJECT> <SECTNO>718.106</SECTNO> <SUBJECT>Non-compliance and fraudulent acreage reports.</SUBJECT> <SECTNO>718.107</SECTNO> <SUBJECT>Acreages.</SUBJECT> <SECTNO>718.108</SECTNO> <SUBJECT>Measuring acreage including skip row acreage</SUBJECT> <SECTNO>718.109</SECTNO> <SUBJECT>Deductions.</SUBJECT> <SECTNO>718.110</SECTNO> <SUBJECT>Adjustments.</SUBJECT> <SECTNO>718.111</SECTNO> <SUBJECT>Notice of measured acreage.</SUBJECT> <SECTNO>718.112</SECTNO> <SUBJECT>Redetermination.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Reconstitution of Farms, Allotments, Quotas, and Bases</HD> <SECTNO>718.201</SECTNO> <SUBJECT>Farm constitution.</SUBJECT> <SECTNO>718.202</SECTNO> <SUBJECT>Determining the land constituting a farm.</SUBJECT> <SECTNO>718.203</SECTNO> <SUBJECT>County committee action to reconstitute a farm.</SUBJECT> <SECTNO>718.204</SECTNO> <SUBJECT>Reconstitution of allotments, quotas, and bases.</SUBJECT> <SECTNO>718.205</SECTNO> <SUBJECT>Substantive change in farming operation, and changes in related legal entities.</SUBJECT> <SECTNO>718.206</SECTNO> <SUBJECT>Determining farms, tracts, allotments, quotas, and bases when reconstitution is made by division.</SUBJECT> <SECTNO>718.207</SECTNO> <SUBJECT>Determining allotments, quotas, and bases when reconstitution is made by combination.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Equitable Relief From Ineligibility</HD> <SECTNO>718.301</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>718.302</SECTNO> <SUBJECT>Definitions and abbreviations.</SUBJECT> <SECTNO>718.303</SECTNO> <SUBJECT>Reliance on incorrect actions or information.</SUBJECT> <SECTNO>718.304</SECTNO> <SUBJECT>Failure to fully comply.</SUBJECT> <SECTNO>718.305</SECTNO> <SUBJECT>Forms of relief.</SUBJECT> <SECTNO>718.306</SECTNO> <SUBJECT>Finality.</SUBJECT> <SECTNO>718.307</SECTNO> <SUBJECT>Special relief approval authority for State Executive Directors.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>7 U.S.C. 1311 <E T="03">et seq.,</E> 1501 <E T="03">et seq.,</E> 1921 <E T="03">et seq.,</E> 7201 <E T="03">et seq.,</E> 15 U.S.C. 714b.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>61 FR 37552, July 18, 1996, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—General Provisions</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 16172, Apr. 3, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 718.1</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>(a) This part is applicable to all programs set forth in chapters VII and XIV of this title which are administered by the Farm Service Agency (FSA). This rule governs how FSA monitors marketing quotas, allotments, base acres and acreage reports. The regulations affected are those that <PRTPAGE P="68"/>establish procedures for measuring allotments and program eligible acreage, and determining program compliance.</P> <P>(b) The provisions of this part will be administered under the general supervision of the Administrator, FSA, and shall be carried out in the field by State and county FSA committees (State and county committees).</P> <P>(c) State and county committees, and representatives and employees thereof, do not have authority to modify or waive any regulations in this part.</P> <P>(d) No provisions or delegation herein to a State or county committee shall preclude the Administrator, FSA, or a designee, from determining any question arising under the program or from reversing or modifying any determination made by a State or county committee.</P> <P>(e) The Deputy Administrator may authorize State and county committees to waive or modify deadlines and other requirements in cases where lateness or failure to meet such other requirements does not adversely affect the operation of the program.</P> </SECTION> <SECTION> <SECTNO>§ 718.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>Except as provided in individual parts of chapters VII and XIV of this title, the following terms shall be as defined herein:</P> <P> <E T="03">Administrative variance</E> (AV) means the amount by which the determined acreage of tobacco may exceed the effective allotment and be considered in compliance with program regulations.</P> <P> <E T="03">Allotment</E> means an acreage for a commodity allocated to a farm in accordance with the Agricultural Adjustment Act of 1938, as amended.</P> <P> <E T="03">Allotment crop</E> means any tobacco crop for which acreage allotments are established pursuant to part 723 of this chapter.</P> <P> <E T="03">Barley</E> means barley that follows the standard planting and harvesting practice of barley for the area in which the barley is grown.</P> <P> <E T="03">Base acres</E> means the quantity of acres established according to part 1413 of this title.</P> <P> <E T="03">CCC</E> means the Commodity Credit Corporation.</P> <P> <E T="03">Combination</E> means consolidation of two or more farms or parts of farms, having the same operator, into one farm.</P> <P> <E T="03">Common ownership unit</E> means a distinguishable parcel of land consisting of one or more tracts of land with the same owners, as determined by FSA.</P> <P> <E T="03">Constitution</E> means the make-up of the farm before any change is made because of change in ownership or operation.</P> <P> <E T="03">Controlled substances</E> means the term set forth in 21 CFR part 1308.</P> <P> <E T="03">Corn</E> means field corn or sterile high-sugar corn that follows the standard planting and harvesting practices for corn for the area in which the corn is grown. Popcorn, corn nuts, blue corn, sweet corn, and corn varieties grown for decoration uses are not corn.</P> <P> <E T="03">County</E> means the county or parish of a state. For Alaska, Puerto Rico and the Virgin Islands, a county shall be an area designated by the State committee with the concurrence of the Deputy Administrator.</P> <P> <E T="03">County committee</E> means the FSA county committee.</P> <P> <E T="03">Crop reporting date</E> means the latest date the Administrator, FSA will allow the farm operator, owner, or their agent to submit a crop acreage report in order for the report to be considered timely.</P> <P> <E T="03">Cropland.</E> (a) Means land which the county committee determines meets any of the following conditions:</P> <P>(1) Is currently being tilled for the production of a crop for harvest. Land which is seeded by drilling, broadcast or other no-till planting practices shall be considered tilled for cropland definition purposes;</P> <P>(2) Is not currently tilled, but it can be established that such land has been tilled in a prior year and is suitable for crop production;</P> <P>(3) Is currently devoted to a one-row or two-row shelter belt planting, orchard, or vineyard;</P> <P>(4) Is in terraces that, were cropped in the past, even though they are no longer capable of being cropped;</P> <P>(5) Is in sod waterways or filter strips planted to a perennial cover;</P> <P>(6) Is preserved as cropland in accordance with part 1410 of this title; or</P> <P>(7) Is land that has newly been broken out for purposes of being planted to a crop that the producer intends to, <PRTPAGE P="69"/>and is capable of, carrying through to harvest, using tillage and cultural practices that are consistent with normal practices in the area; provided further that, in the event that such practices are not utilized other than for reasons beyond the producer's control, the cropland determination shall be void retroactive to the time at which the land was broken out.</P> <P>(b) Land classified as cropland shall be removed from such classification upon a determination by the county committee that the land is:</P> <P>(1) No longer used for agricultural production;</P> <P>(2) No longer suitable for production of crops;</P> <P>(3) Subject to a restrictive easement or contract that prohibits its use for the production of crops unless otherwise authorized by the regulation of this chapter;</P> <P>(4) No longer preserved as cropland in accordance with the provisions of part 1410 of this title and does not meet the conditions in paragraphs (a)(1) through (a)(6) of this definition; or</P> <P>(5) Converted to ponds, tanks or trees other than those trees planted in compliance with a Conservation Reserve Program contract executed pursuant to part 1410 of this title, or trees that are used in one-or two-row shelterbelt plantings, or are part of an orchard or vineyard.</P> <P> <E T="03">Current year</E> means the year for which allotments, quotas, acreages, and bases, or other program determinations are established for that program. For controlled substance violations, the current year is the year of the actual conviction.</P> <P> <E T="03">Deputy Administrator</E> means Deputy Administrator for Farm Programs, Farm Service Agency, U.S. Department of Agriculture or their designee.</P> <P> <E T="03">Determination</E> means a decision issued by a State, county or area FSA committee or its employees that affects a participant's status in a program administered by FSA.</P> <P> <E T="03">Determined acreage</E> means that acreage established by a representative of the Farm Service Agency by use of official acreage, digitizing or planimetering areas on the photograph or other photographic image, or computations from scaled dimensions or ground measurements.</P> <P> <E T="03">Direct and counter-cyclical program (DCP) cropland</E> means land that currently meets the definition of cropland, land that was devoted to cropland at the time it was enrolled in a production flexibility contract in accordance with part 1413 of this title and continues to be used for agricultural purposes, or land that met the definition of cropland on or after April, 4, 1996, and continues to be used for agricultural purposes and not for nonagricultural commercial or industrial use.</P> <P> <E T="03">Division</E> means the division of a farm into two or more farms or parts of farms.</P> <P> <E T="03">Entity</E> means a corporation, joint stock company, association limited partnership, irrevocable trust, estate, charitable organization, or other similar organization including any such organization participating in the farming operation as a partner in a general partnership, a participant in a joint venture, a grantor of a revocable trust, or as a participant in a similar organization.</P> <P> <E T="03">Extra Long Staple (ELS) Cotton</E> means cotton that follows the standard planting and harvesting practices of the area in which the cotton is grown, and meets all of the following conditions:</P> <P>(1) American-Pima, Sea Island, Sealand, all other varieties of the Barbandense species of cotton and any hybrid thereof, and any other variety of cotton in which 1 or more of these varieties is predominant; and,</P> <P>(2) The acreage is grown in a county designated as an ELS county by the Secretary; and,</P> <P>(3) The production from the acreage is ginned on a roller-type gin.</P> <P> <E T="03">Family member</E> means an individual to whom a person is related as spouse, lineal ancestor, lineal descendant, or sibling, including:</P> <P>(1) Great grandparent;</P> <P>(2) Grandparent;</P> <P>(3) Parent;</P> <P>(4) Child, including a legally adopted child;</P> <P>(5) Grandchild</P> <P>(6) Great grandchildren;</P> <P>(7) Sibling of the family member in the farming operation; and<PRTPAGE P="70"/> </P> <P>(8) Spouse of a person listed in paragraphs (1) through (7) of this definition.</P> <P> <E T="03">Farm</E> means a tract, or tracts, of land that are considered to be a separate operation under the terms of this part provided further that where multiple tracts are to be treated as one farm, the tracts must have the same operator and must also have the same owner except that tracts of land having different owners may be combined if all owners agree to the treatment of the multiple tracts as one farm for these purposes.</P> <P> <E T="03">Farm inspection</E> means an inspection by an authorized FSA representative using aerial or ground compliance to determine the extent of producer adherence to program requirements.</P> <P> <E T="03">Farm number</E> means a number assigned to a farm by the county committee for the purpose of identification.</P> <P> <E T="03">Farmland</E> means the sum of the DCP cropland, forest, acreage planted to an eligible crop acreage as specified in 1437.3 of this title and other land on the farm.</P> <P> <E T="03">Field</E> means a part of a farm which is separated from the balance of the farm by permanent boundaries such as fences, permanent waterways, woodlands, and croplines in cases where farming practices make it probable that such cropline is not subject to change, or other similar features.</P> <P> <E T="03">GIS</E> means Geographic Information System or a system that stores, analyzes, and manipulates spatial or geographically referenced data. GIS computes distances and acres using stored data and calculations.</P> <P> <E T="03">GPS</E> means Global Positioning System or a positioning system using satellites that continuously transmit coded information. The information transmitted from the satellites is interpreted by GPS receivers to precisely identify locations on earth by measuring distance from the satellites.</P> <P> <E T="03">Grain sorghum</E> means grain sorghum of a feed grain or dual purpose variety (including any cross that, at all stages of growth, having characteristics of a feed grain or dual purpose variety) that follows the standard planting and harvesting practice for grain sorghum for the area in which the grain sorghum was planted. Sweet sorghum is not considered a grain sorghum.</P> <P> <E T="03">Ground measurement</E> means the distance between 2 points on the ground, obtained by actual use of a chain tape, GPS with a minimum accuracy level as determined by the Deputy Administrator, or other measuring device.</P> <P> <E T="03">Joint operation</E> means a general partnership, joint venture, or other similar business organization.</P> <P> <E T="03">Landlord</E> means one who rents or leases farmland to another.</P> <P> <E T="03">Measurement service</E> means a measurement of acreage or farm-stored commodities performed by a representative of FSA and paid for by the producer requesting the measurement.</P> <P> <E T="03">Measurement service after planting</E> means determining a crop or designated acreage after planting but before the farm operator files a report of acreage for the crop.</P> <P> <E T="03">Measurement service guarantee</E> means a guarantee provided when a producer requests and pays for an authorized FSA representative to measure acreage for FSA and CCC program participation unless the producer takes action to adjust the measured acreage. If the producer has taken no such action, and the measured acreage is later discovered to be incorrect, the acreage determined pursuant to the measurement service will be used for program purposes for that program year.</P> <P> <E T="03">Minor child</E> means an individual who is under 18 years of age. State court proceedings conferring majority on an individual under 18 years of age will not change such an individual's status as a minor.</P> <P> <E T="03">Nonagricultural commercial or industrial use</E> means land that is no longer suitable for producing annual or perennial crops, including conserving uses, or forestry products.</P> <P> <E T="03">Normal planting period</E> means that period during which the crop is normally planted in the county, or area within the county, with the expectation of producing a normal crop.</P> <P> <E T="03">Normal row width</E> means the normal distance between rows of the crop in the field, but not less than 30 inches for all crops.<PRTPAGE P="71"/> </P> <P> <E T="03">Oats</E> means oats that follows the standard planting and harvesting practice of oats for the area in which the oats are grown.</P> <P> <E T="03">Operator</E> means an individual, entity, or joint operation who is determined by the FSA county committee to be in control of the farming operations on the farm.</P> <P> <E T="03">Owner</E> means one who has legal ownership of farmland, including:</P> <P>(1) Any agency of the Federal Government, however, such agency shall not be eligible to receive any payment pursuant to such contract;</P> <P>(2) One who is buying farmland under a contract for deed;</P> <P>(3) One who has a life-estate in the property; or</P> <P>(4) For purposes of enrolling a farm in a program authorized by chapters VII and XIV of this title:</P> <P>(i) One who has purchased a farm in a foreclosure proceeding; and</P> <P>(A) The redemption period has not passed; and</P> <P>(B) The original owner has not redeemed the property.</P> <P>(ii) One who meets the provisions of paragraph (d)(1)(i) of this definition shall be entitled to receive benefits in accordance with an agency program only to the extent the owner complies with all program requirements.</P> <P>(5) One who is an heir to property but cannot provide legal documentation to confirm ownership of the property, if such heir certifies to the ownership of the property and the certification is considered acceptable, as determined by the Deputy Administrator. Upon a false or inaccurate certification the Deputy Administrator may impose liability on the certifying party for additional cost that results—however such a certification may be taken by the Deputy Administrator as a bar to other claims where there has been a failure of other persons claiming an interest in the property to act promptly to protect or declare their interest or where the current public records do not accurately set out the current ownership of the farm.</P> <P> <E T="03">Partial reconstitution</E> means a reconstitution that is made effective in the current year for some crops, but is not made effective in the current year for other crops. This results in the same farm having two or more farm numbers in one crop year.</P> <P> <E T="03">Participant</E> means one who participates in, or receives payments or benefits in accordance with any of the programs administered by FSA.</P> <P> <E T="03">Pasture</E> means land that is used to, or has the potential to, produce food for grazing animals.</P> <P> <E T="03">Person</E> means an individual, or an individual participating as a member of a joint operation or similar operation, a corporation, joint stock company, association, limited stock company, limited partnership, irrevocable trust, revocable trust together with the grantor of the trust, estate, or charitable organization including any entity participating in the farming operation as a partner in a general partnership, a participant in a joint venture, a grantor of a revocable trust, or a participant in a similar entity, or a State, political subdivision or agency thereof. To be considered a separate person for the purpose of this part, the individual or other legal entity must:</P> <P>(1) Have a separate and distinct interest in the land or the crop involved;</P> <P>(2) Exercise separate responsibility for such interest; and</P> <P>(3) Be responsible for the cost of farming related to such interest from a fund or account separate from that of any other individual or entity.</P> <P> <E T="03">Producer</E> means an owner, operator, landlord, tenant, or sharecropper, who shares in the risk of producing a crop and who is entitled to share in the crop available for marketing from the farm, or would have shared had the crop been produced. A producer includes a grower of hybrid seed.</P> <P> <E T="03">Quota</E> means the pounds allocated to a farm for a commodity in accordance with the Agricultural Adjustment Act of 1938, as amended.</P> <P> <E T="03">Random inspection</E> means an examination of a farm by an authorized representative of FSA selected as a part of an impartial sample to determine the adherence to program requirements.</P> <P> <E T="03">Reconstitution</E> means a change in the land constituting a farm as a result of combination or division.</P> <P> <E T="03">Reported acreage</E> means the acreage reported by the farm operator, farm owner, farm producer, or their agent on a Form prescribed by the FSA.<PRTPAGE P="72"/> </P> <P> <E T="03">Required inspection</E> means an examination by an authorized representative of FSA of a farm specifically selected by application of prescribed rules to determine adherence to program requirements or to verify the farm operator's, farm owner's, farm producer, or agent's report.</P> <P> <E T="03">Rice</E> means rice that follows the standard planting and harvesting practices of the area excluding sweet, glutinous, or candy rice such as Mochi Gomi.</P> <P> <E T="03">Secretary</E> means the Secretary of Agriculture of the United States, or a designee.</P> <P> <E T="03">Sharecropper</E> means one who performs work in connection with the production of a crop under the supervision of the operator and who receives a share of such crop for its labor.</P> <P> <E T="03">Skip-row or strip-crop planting</E> means a cultural practice in which strips or rows of the crop are alternated with strips of idle land or another crop.</P> <P> <E T="03">Staking and referencing</E> means determining an acreage before planting by:</P> <P>(1) Measuring or computing a delineated area from ground measurements and documenting the area measured; and, (2) Staking and referencing the area on the ground.</P> <P> <E T="03">Standard deduction</E> means an acreage that is excluded from the gross acreage in a field because such acreage is considered as being used for farm equipment turn-areas. Such acreage is established by application of a prescribed percentage of the area planted to the crop in lieu of measuring the turn area.</P> <P> <E T="03">State</E> means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United States, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Trust Territory of the Pacific Islands.</P> <P> <E T="03">Subdivision</E> means a part of a field that is separated from the balance of the field by temporary boundary, such as a cropline which could be easily moved or will likely disappear.</P> <P> <E T="03">Tenant</E> means:</P> <P>(1) One who rents land from another in consideration of the payment of a specified amount of cash or amount of a commodity; or</P> <P>(2) One (other than a sharecropper) who rents land from another person in consideration of the payment of a share of the crops or proceeds therefrom.</P> <P> <E T="03">Tolerance</E> means a prescribed amount within which the reported acreage and/or production may differ from the determined acreage and/or production and still be considered as correctly reported.</P> <P> <E T="03">Tract</E> means a unit of contiguous land under one ownership, which is operated as a farm, or part of a farm.</P> <P> <E T="03">Tract combination</E> means the combining of two or more tracts if the tracts have common ownership and are contiguous.</P> <P> <E T="03">Tract division</E> means the dividing of a tract into two or more tracts because of a change in ownership or operation.</P> <P> <E T="03">Turn-area</E> means the area across the ends of crop rows which is used for operating equipment necessary to the production of a row crop (also called turn row, headland, or end row).</P> <P> <E T="03">Upland cotton</E> means planted and stub cotton that is not considered extra long staple cotton, and that follows the standard planting and harvesting practices of the area and is produced from other than pure strain varieties of the Barbadense species, any hybrid thereof, or any other variety of cotton in which one or more of these varieties predominate. For program purposes, brown lint cotton is considered upland cotton.</P> <P> <E T="03">Wheat</E> means wheat for feed or dual purpose variety that follows the standard planting and harvesting practice of wheat for the area in which the wheat is grown.</P> <CITA>[68 FR 16172, Apr. 3, 2003; 69 FR 250, Jan. 5, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 718.3</SECTNO> <SUBJECT>State committee responsibilities.</SUBJECT> <P>(a) The State committee shall, with respect to county committees:</P> <P>(1) Take any action required of the county committee, which the county committee fails to take in accordance with this part;</P> <P>(2) Correct or require the county committee to correct any action taken by such committee, which is not in accordance with this part;</P> <P>(3) Require the county committee to withhold taking any action which is not in accordance with this part;<PRTPAGE P="73"/> </P> <P>(4) Review county office rates for producer services to determine equity between counties;</P> <P>(5) Determine, based on cost effectiveness, which counties will use aerial compliance methods and which counties will use ground measurement compliance methods; or</P> <P>(6) Adjust the per acre rate for acreage in excess of 25 acres to reflect the actual cost involved when performing measurement service from aerial slides or digital images.</P> <P>(b) The State committee shall submit to the Deputy Administrator requests to deviate from deductions prescribed in § 718.108, or the error amount or percentage for refunds of redetermination costs as prescribed in § 718.111.</P> </SECTION> <SECTION> <SECTNO>§ 718.4</SECTNO> <SUBJECT>Authority for farm entry and providing information.</SUBJECT> <P>(a) This section applies to all farms that have a tobacco allotment or quota under part 723 of this chapter and all farms that are currently participating in programs administered by FSA.</P> <P>(b) A representative of FSA may enter any farm that participates in an FSA or CCC program in order to conduct a farm inspection as defined in this part. A program participant may request that the FSA representative present written authorization for the farm inspection before granting access to the farm. If a farm inspection is not allowed within 30 days of written authorization:</P> <P>(1) All FSA and CCC program benefits for that farm shall be denied;</P> <P>(2) The person preventing the farm inspection shall pay all costs associated with the farm inspection;</P> <P>(3) The entire crop production on the farm will be considered to be in excess of the quota established for the farm; and</P> <P>(4) For tobacco, the farm operator must furnish proof of disposition of:</P> <P>(i) All tobacco which is in addition to the production shown on the marketing card issued with respect to such farm; and</P> <P>(ii) No credit will be given for disposing of excess tobacco other than that identified by a marketing card unless disposed of in the presence of FSA in accordance with § 718.109 of this part.</P> <P>(c) If a program participant refuses to furnish reports or data necessary to determine benefits in accordance with paragraph (a) of this section, or FSA determines that the report or data was erroneously provided through the lack of good faith, all program benefits relating to the report or data requested will be denied.</P> </SECTION> <SECTION> <SECTNO>§ 718.5</SECTNO> <SUBJECT>Rule of fractions.</SUBJECT> <P>(a) Fractions shall be rounded after completion of the entire associated computation. All mathematical calculations shall be carried to two decimal places beyond the number of decimal places required by the regulations governing each program. In rounding, fractional digits of 49 or less beyond the required number of decimal places shall be dropped; if the fractional digits beyond the required number of decimal places are 50 or more, the figure at the last required decimal place shall be increased by “1” as follows:</P> <GPOTABLE CDEF="s50,r50,10" COLS="3" OPTS="L2,tp0,i1"> <BOXHD> <CHED H="1">Required decimal</CHED> <CHED H="1">Computation</CHED> <CHED H="1">Result</CHED> </BOXHD> <ROW> <ENT I="01">Whole numbers</ENT> <ENT>6.49 (or less)<LI>6.50 (or more)</LI> </ENT> <ENT>6<LI>7</LI> </ENT> </ROW> <ROW> <ENT I="01">Tenths</ENT> <ENT>7.649 (or less)<LI>7.650 (or more)</LI> </ENT> <ENT>7.6<LI>7.7</LI> </ENT> </ROW> <ROW> <ENT I="01">Hundredths</ENT> <ENT>8.8449 (or less)<LI>8.8450 (or more)</LI> </ENT> <ENT>8.84<LI>8.85</LI> </ENT> </ROW> <ROW> <ENT I="01">Thousandths</ENT> <ENT>9.63449 (or less)<LI>9.63450 (or more)</LI> </ENT> <ENT>9.634<LI>9.635</LI> </ENT> </ROW> <ROW> <ENT I="01">0 thousandths</ENT> <ENT>10.993149 (or less)<LI>10.993150 (or more)</LI> </ENT> <ENT>10.9931<LI>10.9932</LI> </ENT> </ROW> </GPOTABLE> <P>(b) The acreage of each field or subdivision computed for tobacco and CCC disaster assistance programs shall be recorded in acres and hundredths of an acre, dropping all thousandths of an acre. The acreage of each field or subdivision computed for crops, except tobacco, shall be recorded in acres and tenths of an acre, rounding all hundredths of an acre to the nearest tenth.</P> </SECTION> <SECTION> <SECTNO>§ 718.6</SECTNO> <SUBJECT>Controlled substance.</SUBJECT> <P>(a) The following terms apply to this section:</P> <P>(1) <E T="03">USDA benefit</E> means the issuance of any grant, contract, loan, or payment by appropriated funds of the United States.</P> <P>(2) <E T="03">Person</E> means an individual.</P> <P>(b) Notwithstanding any other provision of law, any person convicted under Federal or State law of:<PRTPAGE P="74"/> </P> <P>(1) Planting, cultivating, growing, producing, harvesting, or storing a controlled substance in any crop year shall be ineligible for any payment made under any Act, with respect to any commodity produced during the crop year of conviction and the four succeeding crop years, by such person.</P> <P>(2) Possession of a controlled substance, or trafficking in a controlled substance, shall, in addition to any ineligibility under paragraph (b)(1) of this section, be ineligible for any or all USDA benefits, to the extent that a court shall determine to impose such ineligibility pursuant to applicable Federal law, in which case the ineligibility shall be for such period of time as is imposed by the court, pursuant to such law, at the discretion of the court.</P> <P>(c) USDA benefits subject to paragraph (b) of this section include:</P> <P>(1) Any payments or benefits under the Direct and Counter Cyclical Program (DCP) in accordance with part 1413 of this title;</P> <P>(2) Any payments or benefits for losses to trees, crops, or livestock covered under disaster programs administered by FSA;</P> <P>(3) Any price support loan available in accordance with part 1464 of this title;</P> <P>(4) Any price support or payment made under the Commodity Credit Corporation Charter Act;</P> <P>(5) A farm storage facility loan made under section 4(h) of the Commodity Credit Corporation Charter Act or any other Act;</P> <P>(6) Crop Insurance under the Federal Crop Insurance Act;</P> <P>(7) A loan made or guaranteed under the Consolidated Farm and Rural Development Act or any other law formerly administered by the Farmers Home Administration; or</P> <P>(d) If a person denied benefits under this section is a shareholder, beneficiary, or member of an entity or joint operation, benefits for which the entity or joint operation is eligible shall be reduced, for the appropriate period, by a percentage equal to the total interest of the shareholder, beneficiary, or member.</P> <CITA>[68 FR 16172, Apr. 3, 2003; 69 FR 250, Jan. 5, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 718.7</SECTNO> <SUBJECT>Furnishing maps.</SUBJECT> <P>A reasonable number, as determined by FSA, of reproductions of photographs, mosaics and maps shall be available to the owner of a farm insurance companies reinsured by the Federal Crop Insurance Corporation (FCIC), private party contractors performing their official duties on behalf of FSA, CCC, and other USDA agencies. To all others, reproductions shall be made available at the rate FSA determines will cover the cost of making such items available.</P> </SECTION> <SECTION> <SECTNO>§ 718.8</SECTNO> <SUBJECT>Administrative county.</SUBJECT> <P>(a) If all land on the farm is physically located in one county, the farm shall be administratively located in such county. If there is no FSA office in the county or the county offices have been consolidated, the farm shall be administratively located in the contiguous county most convenient for the farm operator.</P> <P>(b) If the land on the farm is located in more than one county, the farm shall be administratively located in either of such counties as the county committees and the farm operator agree. If no agreement can be reached, the farm shall be administratively located in the county where the principal dwelling is situated, or where the major portion of the farm is located if there is no dwelling.</P> <P>(c) The State committee shall submit all requests to deviate from regulations specified in this section to the Deputy Administrator.</P> </SECTION> <SECTION> <SECTNO>§ 718.9</SECTNO> <SUBJECT>Signature requirements.</SUBJECT> <P>(a) When a program authorized by this chapter or Chapter XIV of this title requires the signature of a producer; landowner; landlord; or tenant, a husband or wife may sign all such FSA or CCC documents on behalf of the other spouse, unless such other spouse has provided written notification to FSA and CCC that such action is not authorized. The notification must be provided to FSA with respect to each farm.</P> <P>(b) Except a husband or wife may not sign a document on behalf of a spouse with respect to:<PRTPAGE P="75"/> </P> <P>(1) Program document required to be executed in accordance with part 3 of this title;</P> <P>(2) Easements entered into under part 1410 of this title;</P> <P>(3) Power of attorney;</P> <P>(4) Such other program documents as determined by FSA or CCC.</P> <P>(c) An individual; duly authorized officer of a corporation; duly authorized partner of a partnership; executor or administrator of an estate; trustee of a trust; guardian; or conservator may delegate to another the authority to act on their behalf with respect to FSA and CCC programs administered by USDA service center agencies by execution of a Power of Attorney, or such other form as approved by the Deputy Administrator. FSA and CCC may, at their discretion, allow the delegations of authority by other individuals through use of the Power of Attorney or such other form as approved by the Deputy Administrator.</P> <P>(d) Notwithstanding another provision of this regulation or any other FSA or CCC regulation in this title, a parent may execute documents on behalf of a minor child unless prohibited by a statute or court order.</P> <P>(e) Notwithstanding any other provision in this title, an authorized agent of the Bureau of Indian Affairs (BIA) of the United States Department of Interior may sign as agent for landowners with properties affiliated with or under the management or trust of the BIA. For collection purposes, such payments will be considered as being made to the persons who are the beneficiaries of the payment or may, alternatively, be considered as an obligation of all persons on the farm in general. In the event of a need for a refund or other claim may be collected, among other means, by other monies due such persons or the farm.</P> <CITA>[68 FR 16172, Apr. 3, 2003; 69 FR 250, Jan. 5, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 718.10</SECTNO> <SUBJECT>Time limitations.</SUBJECT> <P>Whenever the final date prescribed in any of the regulations in this title for the performance of any act falls on a Saturday, Sunday, national holiday, State holiday on which the office of the county or State Farm Service Agency committee having primary cognizance of the action required to be taken is closed, or any other day on which the cognizant office is not open for the transaction of business during normal working hours, the time for taking required action shall be extended to the close of business on the next working day. Or in case the action required to be taken may be performed by mailing, the action shall be considered to be taken within the prescribed period if the mailing is postmarked by midnight of such next working day. Where the action required to be taken is with a prescribed number of days after the mailing of notice, the day of mailing shall be excluded in computing such period of time.</P> </SECTION> <SECTION> <SECTNO>§ 718.11</SECTNO> <SUBJECT>Disqualification due to federal crop insurance fraud.</SUBJECT> <P>(a) Section 515(h) of the Federal Crop Insurance Act (FCIA) provides that a person who willfully and intentionally provides any false or inaccurate information to the Federal Crop Insurance Corporation (FCIC) or to an approved insurance provider with respect to a policy or plan of FCIC insurance after notice and an opportunity for a hearing on the record, will be subject to one or more of the sanctions described in section 515(h)(3). In section 515(h)(3), the FCIA specifies that in the case of a violation committed by a producer, the producer may be disqualified for a period of up to 5 years from receiving any monetary or non-monetary benefit under a number of programs. The list includes, but is not limited to, benefits under:</P> <P>(1) Title V of the FCIA.</P> <P>(2) The Agricultural Market Transition Act (7 U.S.C. 7201 <E T="03">et seq.</E>), including the Noninsured Crop Disaster Assistance Program under section 196 of that Act (7 U.S.C. 7333).</P> <P>(3) The Agricultural Act of 1949 (7 U.S.C. 1421 <E T="03">et seq.</E>).</P> <P>(4) The Commodity Credit Corporation Charter Act (15 U.S.C. 714 <E T="03">et seq</E>).</P> <P>(5) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 <E T="03">et seq.</E>).</P> <P>(6) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 <E T="03">et seq.</E>).<PRTPAGE P="76"/> </P> <P>(7) Any law that provides assistance to a producer of an agricultural commodity affected by a crop loss or a decline in prices of agricultural commodities.</P> <P>(b) Violation determinations are made by FCIC. However, upon notice from FCIC to FSA that a producer has been found to have committed a violation to which paragraph (a) of this section applies, that person shall be considered ineligible for payments under the programs specified in paragraph (a) of this section that are funded by FSA for the same period of time for which, as determined by FCIC, the producer will be ineligible for crop insurance benefits of the kind referred to in paragraph (a)(1) of this section. Appeals of the determination of ineligibility will be administered under the rules set by FCIC.</P> <P>(c) Other sanctions may also apply.</P> <CITA>[68 FR 39448, July 2, 2003]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Determination of Acreage and Compliance</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 16176, Apr. 3, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 718.101</SECTNO> <SUBJECT>Measurements.</SUBJECT> <P>(a) Measurement services include, but are not limited to, measuring land and crop areas, quantities of farm-stored commodities, and appraising the yields of crops in the field when required for program administration purposes. The county committee shall provide measurement service if the producer requests such service and pays the cost, except that service shall not be provided to determine total acreage or production of a crop when the request is made:</P> <P>(1) After the established final reporting date for the applicable crop, unless a late filed report is accepted as provided in § 718.103;</P> <P>(2) After the farm operator has furnished production evidence when required for program administration purposes except as provided in this subpart; or</P> <P>(3) In connection with a late-filed report of acreage, unless there is evidence of the crop's existence in the field and use made of the crop, or the lack of the crop due to a disaster condition affecting the crop.</P> <P>(b) The acreage requested to be measured by staking and referencing shall not exceed the effective farm allotment for marketing quota crops or acreage of a crop that is limited to a specific number of acres to meet any program requirement.</P> <P>(c) When a producer requests, pays for, and receives written notice that measurement services have been furnished, the measured acreage shall be guaranteed to be correct and used for all program purposes for the current year even though an error is later discovered in the measurement thereof, if the producer has taken action with an economic significance based on the measurement service, and the entire crop required for the farm was measured. If the producer has not taken action with an economic significance based on the measurement service, the producer shall be notified in writing that an error was discovered and the nature and extent of such error. In such cases, the corrected acreage will be used for determining program compliance for the current year.</P> <P>(d) When a measurement service reveals acreage in excess of the permitted acreage and the allowable tolerance as defined in this part, the producer must destroy the excess acreage and pay for FSA to verify destruction, in order to keep the measurement service guarantee.</P> </SECTION> <SECTION> <SECTNO>§ 718.102</SECTNO> <SUBJECT>Acreage reports.</SUBJECT> <P>(a) In order to be eligible for benefits, participants in the programs specified in paragraphs (b)(1) through (b)(6) of this section must annually submit accurate information as required by these provisions.</P> <P>(b)(1) Participants in the programs governed by part 1412 of this title must report the acreage of fruits and vegetables planted for harvest on a farm enrolled in such program;</P> <P>(2) Participants in the programs governed by parts 1421 and 1427 of this title must report the acreage planted to a commodity for harvest for which a marketing assistance loan or loan deficiency payment is requested;<PRTPAGE P="77"/> </P> <P>(3) Participants in the programs governed by part 1410 of this title must report the use of land enrolled in such programs;</P> <P>(4) All participants in the programs governed by part 1437 of this title must report all acreage in the county of the eligible crop in which the producer has a share;</P> <P>(5) Participants in the programs governed by part 723 of this chapter and part 1464 of this title must report the acreage planted to tobacco by kind on all farms that have an effective allotment or quota greater than zero;</P> <P>(6) All participants in the programs governed by parts 1412, 1421, and 1427 of this title must report the use of all cropland on the farm.</P> <P>(c) The reports required under paragraph (a) of this section shall be timely filed by the farm operator, farm owner, producer of the crop on the farm, or a duly authorized representative with the county committee by the final reporting date applicable to the crop as established by the county committee and State committee.</P> </SECTION> <SECTION> <SECTNO>§ 718.103</SECTNO> <SUBJECT>Late-filed reports.</SUBJECT> <P>(a) A report may be accepted after the required date if the crop or identifiable crop residue is in the field.</P> <P>(b) The farm operator shall pay the cost of a farm inspection unless the County Committee determines that failure to report in a timely manner was beyond the producer's control.</P> </SECTION> <SECTION> <SECTNO>§ 718.104</SECTNO> <SUBJECT>Revised reports.</SUBJECT> <P>(a) The farm operator may revise a report of acreage with respect to 2002 and subsequent years to change the acreage reported if:</P> <P>(1) The county committee determines that the revision does not have an adverse impact on the program;</P> <P>(2) The acreage has not already been determined by FSA; and</P> <P>(3) Actual crop or residue is present in the field.</P> <P>(b) Revised reports shall be filed and accepted:</P> <P>(1) At any time for all crops if the crop or residue still exists in the field for inspection to verify its existence and use made of the crop, the lack of the crop, or a disaster condition affecting the crop; and</P> <P>(2) If the requirements of paragraph (a) of this section have been met and the producer was in compliance with all other program requirements at the reporting date.</P> </SECTION> <SECTION> <SECTNO>§ 718.105</SECTNO> <SUBJECT>Tolerances, variances, and adjustments.</SUBJECT> <P>(a) Tolerance is the amount by which the determined acreage for a crop may differ from the reported acreage or allotment for the crop and still be considered in compliance with program requirements under §§ 718.102(b)(1), (b)(3) and (b)(5).</P> <P>(b) Tolerance rules apply to those fields for which a staking and referencing was performed but such acreage was not planted according to those measurements or when a measurement service is not requested for acreage destroyed to meet program requirements.</P> <P>(c) Tolerance rules do not apply to:</P> <P>(1) Program requirements of §§ 718.102(b)(2), (b)(4) and (b)(6);</P> <P>(2) Official fields when the entire field is devoted to one crop;</P> <P>(3) Those fields for which staking and referencing was performed and such acreage was planted according to those measurements; or</P> <P>(4) The adjusted acreage for farms using measurement after planting which have a determined acreage greater than the marketing quota crop allotment.</P> <P>(d) An administrative variance is applicable to all allotment crop acreages. Allotment crop acreages as determined in accordance with this part shall be deemed in compliance with the effective farm allotment or program requirement when the determined acreage does not exceed the effective farm allotment by more than an administrative variance determined as follows:</P> <P>(1) For all kinds of tobacco subject to marketing quotas, except dark air-cured and fire-cured the larger of 0.1 acre or 2 percent of the allotment; and</P> <P>(2) For dark air-cured and fire-cured tobacco, an acreage based on the effective acreage allotment as provided in the table as follows:</P> <GPOTABLE CDEF="s50,15" COLS="2" OPTS="L2,tp0,i1"> <BOXHD> <CHED H="1">Effective acreage allotment is within this range</CHED> <CHED H="1">Administrative variance</CHED> </BOXHD> <ROW> <ENT I="01">0.01 to 0.99</ENT> <ENT>0.01</ENT> </ROW> <ROW> <ENT I="01">1.00 to 1.49</ENT> <ENT>0.02</ENT> </ROW> <ROW> <ENT I="01">1.50 to 1.99</ENT> <ENT>0.03</ENT> </ROW> <ROW> <PRTPAGE P="78"/> <ENT I="01">2.00 to 2.49</ENT> <ENT>0.04</ENT> </ROW> <ROW> <ENT I="01">2.50 to 2.99</ENT> <ENT>0.05</ENT> </ROW> <ROW> <ENT I="01">3.00 to 3.49</ENT> <ENT>0.06</ENT> </ROW> <ROW> <ENT I="01">3.50 to 3.99</ENT> <ENT>0.07</ENT> </ROW> <ROW> <ENT I="01">4.00 to 4.49</ENT> <ENT>0.08</ENT> </ROW> <ROW> <ENT I="01">4.50 and up</ENT> <ENT>0.09</ENT> </ROW> </GPOTABLE> <P>(e) A tolerance applies to tobacco, other than flue-cured or burley, if the measured acreage exceeds the allotment by more than the administrative variance but by not more than the tolerance. Such excess acreage of tobacco may be adjusted to the effective farm acreage allotment to avoid marketing quota penalties or receive price support.</P> <P>(f) If the acreage report for a crop is outside the tolerance for that crop:</P> <P>(1) FSA may consider the requirements of §§ 718.102 (b)(1), (b)(3) and (b)(5) not to have been met, and;</P> <P>(2) Participants may be ineligible for all or a portion of payments or benefits subject to the requirements of §§ 718.102 (b)(1), (b)(3) and (b)(5).</P> </SECTION> <SECTION> <SECTNO>§ 718.106</SECTNO> <SUBJECT>Non-compliance and fraudulent acreage reports.</SUBJECT> <P>Participants that knowingly and willfully provide false or inaccurate acreage reports may be ineligible for some or all payments or benefits subject to the requirements of §§ 718.102 (b)(1), (b)(3) and (b)(5):</P> <P>(a) The county committee determines that the acreage report filed according to §§ 718.102 (b)(1), (b)(3) and (b)(5) is inaccurate, and;</P> <P>(b) A good-faith effort to accurately report the acreage was not made because the report was knowingly and willfully falsified.</P> </SECTION> <SECTION> <SECTNO>§ 718.107</SECTNO> <SUBJECT>Acreages.</SUBJECT> <P>(a) If an acreage has been established by FSA for an area delineated on an aerial photograph or within a GIS, such acreage will be recognized by the county committee as the acreage for the area until such time as the boundaries of such area are changed. When boundaries not visible on the aerial photograph are established from data furnished by the producer, such acreage shall not be recognized as official acreage until an authorized representative of FSA verifies the boundaries.</P> <P>(b) Measurements of any row crop shall extend beyond the planted area by the larger of 15 inches or one-half the distance between the rows.</P> <P>(c) The entire acreage of a field or subdivision of a field devoted to a crop shall be considered as devoted to the crop subject to a deduction or adjustment except as otherwise provided in this part.</P> </SECTION> <SECTION> <SECTNO>§ 718.108</SECTNO> <SUBJECT>Measuring acreage including skip row acreage.</SUBJECT> <P>(a) When one crop is alternating with another crop, whether or not both crops have the same growing season, only the acreage that is actually planted to the crop being measured will be considered to be acreage devoted to the measured crop.</P> <P>(b) Subject to the provisions of this paragraph and section, whether planted in a skip row pattern or without a pattern of skipped rows, the entire acreage of the field or subdivision may be considered as devoted to the crop only where the distance between the rows, for all rows, is 40 inches or less. If there is a skip that creates idle land wider than 40 inches, or if the distance between any rows is more than 40 inches, then the area planted to the crop shall be considered to be that area which would represent the smaller of; a 40 inch width between rows, or the normal row spacing in the field for all other rows in the field—those that are not more than 40 inches apart. The allowance for individual rows would be made based on the smaller of actual spacing between those rows or the normal spacing in the field. For example, if the crop is planted in single, wide rows that are 48 inches apart, only 20 inches to either side of each row (for a total of 40 inches between the two rows) could, at a maximum, be considered as devoted as the crop and normal spacing in the field would control. Half the normal distance between rows will also be allowed beyond the outside planted rows not to exceed 20 inches and will reflect normal spacing in the field.</P> <P>(c) In making calculations under this section, further reductions may be made in the acreage considered planted if it is determined that the acreage is more sparsely planted than normal <PRTPAGE P="79"/>using reasonable and customary full production planting techniques.</P> <P>(d) The Deputy Administrator has the discretionary authority to allow row allowances other than those specified in this section in those instances in which crops are normally planted with spacings greater or less than 40 inches, such as in case of tobacco, or where other circumstances are present which the Deputy Administrator finds justifies that allowance.</P> <P>(e) Paragraphs (a) through (d) of this section shall apply with respect to the 2003 and subsequent crops. For preceding crops, the rules in effect on January 1, 2002, shall apply.</P> </SECTION> <SECTION> <SECTNO>§ 718.109</SECTNO> <SUBJECT>Deductions.</SUBJECT> <P>(a) Any contiguous area which is not devoted to the crop being measured and which is not part of a skip-row pattern under § 718.108 shall be deducted from the acreage of the crop if such area meets the following minimum national standards or requirements:</P> <P>(1) A minimum width of 30 inches;</P> <P>(2) For tobacco—three-hundredths (.03) acre. Turn areas, terraces, permanent irrigation and drainage ditches, sod waterways, non-cropland, and subdivision boundaries each of which is at least 30 inches in width may be combined to meet the 0.03-acre minimum requirement; or</P> <P>(3) For all other crops and land uses—one-tenth (.10) acre. Turn areas, terraces, permanent irrigation and drainage ditches, sod waterways, non-cropland, and subdivision boundaries each of which is at least 30 inches in width and each of which contain 0.1 acre or more may be combined to meet any larger minimum prescribed for a State in accordance with this subpart.</P> <P>(b) If the area not devoted to the crop is located within the planted area, the part of any perimeter area that is more than 217.8 feet (33 links) in width will be considered to be an internal deduction if the standard deduction is used.</P> <P>(c) A standard deduction of 3 percent of the area devoted to a row crop and zero percent of the area devoted to a close-sown crop may be used in lieu of measuring the acreage of turn areas.</P> </SECTION> <SECTION> <SECTNO>§ 718.110</SECTNO> <SUBJECT>Adjustments.</SUBJECT> <P>(a) The farm operator or other interested producer having excess tobacco acreage (other than flue-cured or burley) may adjust an acreage of the crop in order to avoid a marketing quota penalty if such person:</P> <P>(1) Notifies the county committee of such election within 15 calendar days after the date of mailing of notice of excess acreage by the county committee; and</P> <P>(2) Pays the cost of a farm inspection to determine the adjusted acreage prior to the date the farm visit is made.</P> <P>(b) The farm operator may adjust an acreage of tobacco (except flue-cured and burley) by disposing of such excess tobacco prior to the marketing of any of the same kind of tobacco from the farm. The disposition shall be witnessed by a representative of FSA and may take place before, during, or after the harvesting of the same kind of tobacco grown on the farm. However, no credit will be allowed toward the disposition of excess acreage after the tobacco is harvested but prior to marketing, unless the county committee determines that such tobacco is representative of the entire crop from the farm of the kind of tobacco involved.</P> </SECTION> <SECTION> <SECTNO>§ 718.111</SECTNO> <SUBJECT>Notice of measured acreage.</SUBJECT> <P>Notice of measured acreage shall be provided by FSA and mailed to the farm operator. This notice shall constitute notice to all parties who have ownership, leasehold interest, or other, in such farm.</P> </SECTION> <SECTION> <SECTNO>§ 718.112</SECTNO> <SUBJECT>Redetermination.</SUBJECT> <P>(a) A redetermination of crop acreage, appraised yield, or farm-stored production for a farm may be initiated by the county committee, State committee, or Deputy Administrator at any time. Redetermination may be requested by a producer with an interest in the farm if they pay the cost of the redetermination. The request must be submitted to FSA within 15 calendar days after the date of the notice described in §§ 718.110 or 718.111, or within 5 calendar days after the initial appraisal of the yield of a crop, or before the farm-stored production is removed from storage. A redetermination shall <PRTPAGE P="80"/>be undertaken in the manner prescribed by the Deputy Administrator. A redetermination shall be used in lieu of any prior determination.</P> <P>(b) The county committee shall refund the payment of the cost for a redetermination when, because of an error in the initial determination:</P> <P>(1) The appraised yield is changed by at least the larger of:</P> <P>(i) Five percent or 5 pounds for cotton;</P> <P>(ii) Five percent or 1 bushel for wheat, barley, oats, and rye; or</P> <P>(iii) Five percent or 2 bushels for corn and grain sorghum; or</P> <P>(2) The farm stored production is changed by at least the smaller of 3 percent or 600 bushels; or</P> <P>(3) The acreage of the crop is:</P> <P>(i) Changed by at least the larger of 3 percent or 0.5 acre; or</P> <P>(ii) Considered to be within program requirements.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Reconstitution of Farms, Allotments, Quotas, and Bases</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 16178, Apr. 3, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 718.201</SECTNO> <SUBJECT>Farm constitution.</SUBJECT> <P>(a) In order to implement agency programs and monitor farmer compliance with regulations, the agency must have records on what land is being farmed by a particular producer. This is accomplished by a determination of what land or groups of land `constitute' an individual unit or farm. Land, which has been properly constituted under prior regulations, shall remain so constituted until a reconstitution is required under paragraph (c) of this section. The constitution and identification of land as a farm for the first time and the subsequent reconstitution of a farm made hereafter, shall include all land operated by an individual entity or joint operation as a single farming unit except that it shall not include:</P> <P>(1) Land under separate ownership unless the owners agree in writing and the labor, equipment, accounting system, and management are operated in common by the operator but separate from other tracts;</P> <P>(2) Land under a lease agreement of less than 1 year duration;</P> <P>(3) Land in different counties when the tobacco allotments or quotas established for the land involved cannot be transferred from one county to another county by lease, sale, or owner. However, this paragraph shall not apply if:</P> <P>(i) All of the land is contiguous;</P> <P>(ii) The land is located in counties that are contiguous in the same State if:</P> <P>(A) A burley or flue-cured tobacco quota is established for one or more of the tracts; and</P> <P>(B) The county committee determines that the tracts will be operated as a single farming unit as set forth in § 718.202; or</P> <P>(iii) Because of a change in operation, tracts or parts of tracts will be divided from the parent farm that currently has land in more than one county, and there is no change in operation and ownership of the remainder of the farm, or if there is a change in ownership, the new owner agrees in writing to the constitution of the farm.</P> <P>(4) Federally-owned land;</P> <P>(5) State-owned wildlife lands unless the former owner has possession of the land under a leasing agreement; and</P> <P>(6) Land constituting a farm which is declared ineligible to be enrolled in a program under the regulations governing the program; and</P> <P>(7) For acreage base crops, land located in counties that are not contiguous. However, this paragraph shall not apply if:</P> <P>(i) Counties are divided by a river;</P> <P>(ii) Counties do not touch because of a correction line adjustment; or</P> <P>(iii) The land is within 20 miles, by road, of other land that will be a part of the farming unit.</P> <P>(b)(1) If all land on the farm is physically located in one county, the farm shall be administratively located in such county. If there is no FSA office in the county or the county offices have been consolidated, the farm shall be administratively located in the contiguous county most convenient for the farm operator.</P> <P>(2) If the land on the farm is located in more than one county, the farm <PRTPAGE P="81"/>shall be administratively located in either of such counties as the county committees and the farm operator agree. If no agreement can be reached, the farm shall be administratively located in the county where the principal dwelling is situated, or where the major portion of the farm is located if there is no dwelling.</P> <P>(c) A reconstitution of a farm either by division or by combination shall be required whenever:</P> <P>(1) A change has occurred in the operation of the land after the last constitution or reconstitution and as a result of such change the farm does not meet the conditions for constitution of a farm as set forth in paragraph (a) of this section except that no reconstitution shall be made if the county committee determines that the primary purpose of the change in operation is to establish eligibility to transfer allotments subject to sale or lease, or increase amount of program benefits received;</P> <P>(2) The farm was not properly constituted the previous time;</P> <P>(3) An owner requests in writing that the land no longer be included in a farm composed of tracts under separate ownership;</P> <P>(4) The county committee determines that the farm was reconstituted on the basis of false information;</P> <P>(5) The county committee determines that tracts included in a farm are not being operated as a single farming unit.</P> <P>(d) Reconstitution shall not be approved if the county committee determines that the primary purpose of the reconstitution is to:</P> <P>(1) Circumvent the provisions of part 12 of this title; or</P> <P>(2) Circumvent any other chapter of this title.</P> </SECTION> <SECTION> <SECTNO>§ 718.202</SECTNO> <SUBJECT>Determining the land constituting a farm.</SUBJECT> <P>(a) In determining the constitution of a farm, consideration shall be given to provisions such as ownership and operation. For purposes of this part, the following rules shall be applicable to determining what land is to be included in a farm.</P> <P>(b) A minor shall be considered to be the same owner or operator as the parent, court-appointed guardian, or other person responsible for the minor child, unless the parent or guardian has no interest in the minor's farm or production from the farm, and the minor:</P> <P>(1) Is a producer on a farm;</P> <P>(2) Maintains a separate household from the parent or guardian;</P> <P>(3) Personally carries out the farming activities; and</P> <P>(4) Maintains a separate accounting for the farming operation.</P> <P>(c) A minor shall not be considered to be the same owner or operator as the parent or court-appointed guardian if the minor's interest in the farming operation results from being the beneficiary of an irrevocable trust and ownership of the property is vested in the trust or the minor.</P> <P>(d) A life estate tenant shall be considered to be the owner of the property for their life.</P> <P>(e) A trust shall be considered to be an owner with the beneficiary of the trust; except a trust can be considered a separate owner or operator from the beneficiary, if the trust:</P> <P>(1) Has a separate and distinct interest in the land or crop involved;</P> <P>(2) Exercises separate responsibility for the separate and distinct interest; and</P> <P>(3) Maintains funds and accounts separate from that of any other individual or entity for the interest.</P> <P>(f) The county committee shall require specific proof of ownership.</P> <P>(g) Land owned by different persons of an immediate family living in the same household and operated as a single farming unit shall be considered as being under the same ownership in determining a farm.</P> <P>(h) All land operated as a single unit and owned and operated by a parent corporation and subsidiary corporations of which the parent corporation owns more than 50 percent of the value of the outstanding stock, or where the parent is owned and operated by subsidiary corporations, shall be constituted as one farm.</P> </SECTION> <SECTION> <SECTNO>§ 718.203</SECTNO> <SUBJECT>County committee action to reconstitute a farm.</SUBJECT> <P>Action to reconstitute a farm may be initiated by the county committee, the farm owner, or the operator with the <PRTPAGE P="82"/>concurrence of the owner of the farm. Any request for a farm reconstitution shall be filed with the county committee.</P> </SECTION> <SECTION> <SECTNO>§ 718.204</SECTNO> <SUBJECT>Reconstitution of allotments, quotas, and bases.</SUBJECT> <P>(a) Farms shall be reconstituted in accordance with this subpart when it is determined that the land areas are not properly constituted and, to the extent practicable, shall be based on the facts and conditions existing at the time the change requiring the reconstitution occurred.</P> <P>(b) Reconstitutions of farms subject to a direct and counter-cyclical program contract in accordance with part 1413 of this title will be effective for the current year if initiated on or before August 1 or prior to the issuance of DCP payments for the farm or farms being reconstituted.</P> <P>(c) For tobacco farms, a reconstitution will be effective for the current year for each crop for which the reconstitution is initiated before the planting of such crop begins or would have begun.</P> <P>(d) Notwithstanding the provisions of paragraph (c) of this section, a reconstitution may be effective for the current year if the county committee determines, and the State committee concurs, that the purpose of the request for reconstitution is not to perpetrate a scheme or device designed to evade the requirements governing programs found in this title.</P> </SECTION> <SECTION> <SECTNO>§ 718.205</SECTNO> <SUBJECT>Substantive change in farming operation, and changes in related legal entities.</SUBJECT> <P>(a) Land that is properly constituted as a farm shall not be reconstituted if:</P> <P>(1) The reconstitution request is based upon the formation of a newly established legal entity which owns or operates the farm or any part of the farm and the county committee determines there is not a substantive change in the farming operation;</P> <P>(2) The county committee determines that the primary purpose of the request for reconstitution is to:</P> <P>(i) Obtain additional benefits under one or more commodity programs;</P> <P>(ii) Avoid damages or penalties under a contract or statute;</P> <P>(iii) Correct an erroneous acreage report; or</P> <P>(iv) Circumvent any other program provisions. In addition, no farm shall remain as constituted when the county committee determines that a substantive change in the farming operation has occurred which would require a reconstitution, except as otherwise approved by the State committee with the concurrence of the Deputy Administrator.</P> <P>(b) In determining whether a substantive change has occurred with respect to a farming operation, the county committee shall consider factors such as the composition of the legal entities having an interest in the farming operation with respect to management, financing, and accounting. The county committee shall also consider the use of land, labor, and equipment available to the farming operations and any other relevant factors that bear on the determination.</P> <P>(c) Unless otherwise approved by the State committee with the concurrence of the Deputy Administrator, when the county committee determines that a corporation, trust, or other legal entity is formed primarily for the purpose of obtaining additional benefits under the commodity programs of this title, the farm shall remain as constituted, or shall be reconstituted, as applicable, when the farm is owned or operated by:</P> <P>(1) A corporation having more than 50 percent of the stock owned by members of the same family living in the same household;</P> <P>(2) Corporations having more than 50 percent of the stock owned by stockholders common to more than one corporation; or</P> <P>(3) Trusts in which the beneficiaries and trustees are family members living in the same household.</P> <P>(d) Application of the provisions of paragraph (c) of this section shall not limit or affect the application of paragraphs (a) and (b) of this section.</P> </SECTION> <SECTION> <SECTNO>§ 718.206</SECTNO> <SUBJECT>Determining farms, tracts, allotments, quotas, and bases when reconstitution is made by division.</SUBJECT> <P>(a) The methods for dividing farms, tracts, allotments, quotas, and bases in order of precedence, when applicable, are estate, designation by landowner, <PRTPAGE P="83"/>contribution, cropland, DCP cropland, default, and history. The proper method shall be determined on a crop by crop basis.</P> <P>(b)(1) The estate method is the pro-rata distribution of allotments, quotas, and bases for a parent farm among the heirs in settling an estate. If the estate sells a tract of land before the farm is divided among the heirs, the allotments, quotas, and bases for that tract shall be determined according to paragraphs (c) through (h) of this section.</P> <P>(2) Allotments, quotas, and bases shall be divided in accordance with a will, but only if the county committee determines that the terms of the will are such that a division can reasonably be made by the estate method.</P> <P>(3) If there is no will or the county committee determines that the terms of a will are not clear as to the division of allotments, quotas, and bases, such allotments, quotas, and bases shall be apportioned in the manner agreed to in writing by all interested heirs or devisees who acquire an interest in the property for which such allotments, quotas, and bases have been established. An agreement by the administrator or executor shall not be accepted in lieu of an agreement by the heirs or devisees.</P> <P>(4) If allotments, quotas, and bases are not apportioned in accordance with the provisions of paragraphs (b)(2) or (b)(3) of this section, the allotments, quotas, and bases shall be divided pursuant to paragraphs (d) through (h) of this section, as applicable.</P> <P>(c)(1) If the ownership of a tract of land is transferred from a parent farm, the transferring owner may request that the county committee divide the allotments, quotas, and bases, including historical acreage that has been double cropped, between the parent farm and the transferred tract, or between the various tracts if the entire farm is sold to two or more purchasers, in a manner designated by the owner of the parent farm subject to the conditions set forth in paragraph (c)(3) of this section.</P> <P>(2) If the county committee determines that allotments, quotas, and bases cannot be divided in the manner designated by the owner because of the conditions set forth in paragraph (c)(3) of this section, the owner shall be notified and permitted to revise the designation so as to meet the conditions in paragraph (c)(3) of this section. If the owner does not furnish a revised designation of allotments, quotas, and bases within a reasonable time after such notification, or if the revised designation does not meet the conditions of paragraph (c)(3) of this section, the county committee will divide the allotments, quotas, and bases in a pro-rata manner in accordance with paragraphs (d) through (h) of this section.</P> <P>(3) A landowner may designate a manner in which allotments, quotas, and bases are divided according to this paragraph.</P> <P>(i) The transferring owner and transferee shall file a signed written memorandum of understanding of the designation with the county committee before any CCC or FSA prescribed form, letter or contract providing an allotment, base or quota is issued and before a subsequent transfer of ownership of the land. The landowner shall designate the allotments, quotas, and bases that shall be permanently reduced when the sum of the allotments, quotas, and bases exceeds the cropland for the farm.</P> <P>(ii) Where the part of the farm from which the ownership is being transferred was owned for a period of less than 3 years, the designation by landowner method shall not be available with respect to the transfer unless the county committee determines that the primary purpose of the ownership transfer was other than to retain or to sell allotments, quotas, or bases. In the absence of such a determination, and if the farm contains land which has been owned for less than 3 years, that part of the farm which has been owned for less than 3 years shall be considered as a separate farm and the allotments, quotas, or bases, shall be assigned to that part in accordance with paragraphs (d) through (h) of this section. Such apportionment shall be made prior to any designation of allotments, quotas, and bases with respect to the part that has been owned for 3 years or more.</P> <P>(4) The designation by landowner method is not applicable to crop allotments or quotas which are restricted to <PRTPAGE P="84"/>transfer within the county by lease, sale, or by owner, when the land on which the farm is located is in two or more counties.</P> <P>(5) The designation by landowner method may be applied at the owner's request to land owned by any Indian Tribal Council which is leased to two or more producers for the production of any crop of a commodity for which an allotment, quota, or base has been established. If the land is leased to two or more producers, an Indian Tribal Council may request that the county committee divide the allotments, quotas, and bases between the applicable tracts in the manner designated by the Council. The use of this method shall not be subject to the conditions of paragraph (c)(3) of this section.</P> <P>(d)(1) The contribution method is the pro-rata distribution of a parent farm's allotments and quotas to each tract as the tract contributed to the allotments and quotas at the time of combination and may be used when the provisions of paragraphs (b) and (c) of this section do not apply.</P> <P>(2) The county committee determines and the State committee or a representative thereof concurs, that the use of the contribution method would not result in an equitable distribution of allotments and quotas, considering available land, cultural operations, and changes in type of farming.</P> <P>(e) The cropland method is the pro-rata distribution of allotments and quotas to separate tracts proportionately to the tract's contribution to the cropland for the parent tract. This method shall be used if paragraphs (b) through (d) of this section do not apply unless the county committee determines that division by the history method would result in more representative allotments and quotas than the cropland method, taking into consideration the operation normally carried out on each tract for the commodities produced on the farm.</P> <P>(f)(1) The history method is the pro-rata distribution of allotments and quotas to separate tracts on the basis of the operation normally carried out on each tract of the parent farm. The county committee may use the history method of dividing allotments and quotas when it:</P> <P>(i) Determines that this method would result in a more accurate pro-rata distribution of allotments and quotas based on actual contribution of the tract to the totals of the parent farm than the cropland method would; and</P> <P>(ii) Obtains written consent of all owners to use the history method.</P> <P>(2) The county committee may waive the requirement for written consent of the owners for dividing allotments and quotas if the county committee determines that the use of the cropland method would result in an inequitable division of the parent farm's allotments and quotas and the use of the history method would provide more favorable results for all owners.</P> <P>(g) The DCP cropland method is the pro-rata distribution of bases to the resulting tracts in the same proportion to the DCP cropland that each resulting tract bears to the DCP cropland for the parent tract. This method of division shall be used if paragraphs (b) and (c) of this section do not apply.</P> <P>(h) The default method is the separation of tracts from a farm with each tract maintaining the bases attributed to the tract when the reconstitution is initiated.</P> <P>(i)(1) Allotments, quotas, and bases apportioned among the resulting farms pursuant to paragraphs (d) through (h) of this section may be increased or decreased with respect to a farm by as much as 10 percent of the parent farm's allotment, quota, or base determined under such subsections for the parent farm if:</P> <P>(i) The owners agree in writing; and</P> <P>(ii) The county committee determines the method used did not provide an equitable distribution considering available land, cultural operations, and changes in the type of farming conducted on the farm. Any increase in an allotment, quota, or base with respect to a tract pursuant to this paragraph shall be offset by a corresponding decrease for such allotments, quotas or bases established with respect to the other tracts which constitute the farm.</P> <P>(2) Farm program payment yields calculated for the resulting farms of a division may be increased or decreased if the county committee determines <PRTPAGE P="85"/>the method used did not provide an equitable distribution considering available land, cultural operations, and changes in the type of farming conducted on the farm. Any increase in a farm program payment yield on a resulting farm shall be offset by a corresponding decrease on another resulting farm of the division.</P> <P>(j) If a farm with burley tobacco quota is divided through reconstitution and one or more of the farms resulting from the division are apportioned less than 1,000 pounds of burley tobacco quota, the owners of such farms shall take action as provided in part 723 of this chapter to comply with the 1,000 pound minimum by July 1 of the current year or the quota shall be dropped. Exceptions to this are farms divided:</P> <P>(1) Among family members;</P> <P>(2) By the estate method; and</P> <P>(3) When no sale or change in ownership of land occurs; or</P> <P>(4) With one resulting farm receiving all of the quota.</P> </SECTION> <SECTION> <SECTNO>§ 718.207</SECTNO> <SUBJECT>Determining allotments, quotas, and bases when reconstitution is made by combination.</SUBJECT> <P>When two or more farms or tracts are combined for a year, that year's allotments, quotas, and bases, with respect to the combined farm or tract, as required by applicable commodity regulations, shall not be greater than the sum of the allotments, quotas, and bases for each of the farms or tracts comprising the combination, subject to the provisions of § 718.204.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Equitable Relief From Ineligibility</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>67 FR 66307, Oct. 31, 2002, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 718.301</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>(a) This subpart is applicable to programs administered by the Farm Service Agency under chapters VII and XIV of this title, except for an agricultural credit program carried out under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 <E T="03">et seq.</E>). Administration of this subpart shall be under the supervision of the Deputy Administrator, except that such authority shall not limit the exercise of authority allowed State Executive Directors of the Farm Service agency as provided for in § 718.307.</P> <P>(b) Sections 718.303, 718.304, and 718.307 do not apply where the action for which relief is requested occurred before May 13, 2002. In such cases, authority that was effective prior to May 13, 2002, may be applied.</P> <P>(c) Section 718.306 does not apply to a function performed under either section 376 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 <E T="03">et seq.</E>), or a conservation program administered by the Natural Resources Conservation Service of the United States Department of Agriculture.</P> </SECTION> <SECTION> <SECTNO>§ 718.302</SECTNO> <SUBJECT>Definitions and abbreviations.</SUBJECT> <P>In addition to the definitions provided in § 718.2 of this part, the following terms apply to this subpart:</P> <P> <E T="03">Agricultural commodity</E> means any agricultural commodity, food, feed, fiber, or livestock that is subject to a covered program.</P> <P> <E T="03">Covered program</E> means a program specified in § 718.301 of this subpart.</P> <P> <E T="03">FSA</E> means the Farm Service Agency of the United States Department of Agriculture.</P> <P> <E T="03">OGC</E> means the Office of the General Counsel of the United States Department of Agriculture.</P> <P> <E T="03">SED</E> means, for activities within a particular state, the State Executive Director of the United States Department of Agriculture, FSA, for that state.</P> </SECTION> <SECTION> <SECTNO>§ 718.303</SECTNO> <SUBJECT>Reliance on incorrect actions or information.</SUBJECT> <P>(a) Notwithstanding any other law, action or inaction by a participant in a covered program that is to the detriment of the participant, and that is based upon good faith reliance on the action or advice of an authorized representative of a County or State FSA Committee, may be approved by the Administrator, FSA or the Executive Vice President, CCC, as applicable, or their designee, as meeting the requirements of the program, and benefits may be extended or payments made in accordance with § 718.305.</P> <P>(b) This section applies only to a participant who relied upon the action of, <PRTPAGE P="86"/>or information provided by, a county or State FSA committee or an authorized representative of such committee and the participant acted, or failed to act, as a result of the Agency action or information. This part does not apply to cases where the participant had sufficient reason to know that the action or information upon which they relied was improper or erroneous or where the participant acted in reliance on their own misunderstanding or misinterpretation of program provisions, notices or information.</P> </SECTION> <SECTION> <SECTNO>§ 718.304</SECTNO> <SUBJECT>Failure to fully comply.</SUBJECT> <P>(a) Under a covered program, when the failure of a participant to fully comply with the terms and conditions of a program authorized by this chapter precludes the providing of payments or benefits, relief may be authorized in accordance with § 718.305 if the participant made a good faith effort to comply fully with the requirements of the covered program.</P> <P>(b) This section only applies to participants who are determined by the FSA approval official to have made a good faith effort to comply fully with the terms and conditions of the program and rendered substantial performance.</P> </SECTION> <SECTION> <SECTNO>§ 718.305</SECTNO> <SUBJECT>Forms of relief.</SUBJECT> <P>(a) The Administrator of FSA, Executive Vice President of CCC, or their designee, may authorize a participant in a covered program to:</P> <P>(1) Retain loans, payments, or other benefits received under the covered program;</P> <P>(2) Continue to receive loans, payments, and other benefits under the covered program;</P> <P>(3) Continue to participate, in whole or in part, under any contract executed under the covered program;</P> <P>(4) In the case of a conservation program, re-enroll all or part of the land covered by the program; and</P> <P>(5) Receive such other equitable relief as determined to be appropriate.</P> <P>(b) As a condition of receiving relief under this subpart, the participant may be required to remedy their failure to meet the program requirement, or mitigate its affects.</P> </SECTION> <SECTION> <SECTNO>§ 718.306</SECTNO> <SUBJECT>Finality.</SUBJECT> <P>(a) A determination by a State or county FSA committee made on or after October 13, 1994, becomes final and binding 90 days from the date the application for benefits has been filed, and supporting documentation required to be supplied by the producer as a condition for eligibility for the particular program has been filed, unless one of the following conditions exist:</P> <P>(1) The participant has requested an administrative review of the determination in accordance with part 780 of this chapter;</P> <P>(2) The determination was based on misrepresentation, false statement, fraud, or willful misconduct by or on behalf of the participant;</P> <P>(3) The determination was modified by the Administrator, FSA, or in the case of CCC programs conducted under Chapter XIV of this title, the Executive Vice President, CCC; or</P> <P>(4) The participant had reason to know that the determination was erroneous.</P> <P>(b) Should an erroneous determination become final under the provisions of this section, it shall only be effective through the year in which the error was found and communicated to the participant.</P> </SECTION> <SECTION> <SECTNO>§ 718.307</SECTNO> <SUBJECT>Special relief approval authority for State Executive Directors.</SUBJECT> <P>(a) <E T="03">General nature of the special authority.</E> Notwithstanding provisions in this subpart providing supervision and relief authority to other officials, an SED without further review by other officials (other than the Secretary) may grant relief to a participant under the provisions of §§ 718.303 and 718.304 as if the SED were the final arbiter within the agency of such matters so long as:</P> <P>(1) The program matter with respect to which the relief is sought is a program matter in a covered program which is operated within the State under the control of the SED;</P> <P>(2) The total amount of relief which will be provided to the person (that is, to the individual or entity that applies for the relief) by that SED under this special authority for errors during that year is less than $20,000 (including in that calculation, any loan amount or <PRTPAGE P="87"/>other benefit of any kind payable for that year and any other year);</P> <P>(3) The total amount of such relief which has been previously provided to the participant using this special authority for errors in that year, as calculated above, is not more than $5,000;</P> <P>(4) The total amount of loans, payments, and benefits of any kind for which relief is provided to similarly situated participants by the SED (or the SED's predecessor) for errors for any year under the authority provided in this section, as calculated above, is not more than $1,000,000.</P> <P>(b) <E T="03">Report of the exercise of the power.</E> A grant of relief shall be considered to be under this section and subject to the special finality provided in this section only if the SED grants the relief in writing when granting the relief to the party who will receive the benefit of such relief and only if, in that document, the SED declares that they are exercising that power. The SED must report the exercise of that power to the Deputy Administrator so that a full accounting may be made in keeping with the limitations of this section. Absent such a report, relief will not be considered to have been made under this section.</P> <P>(c) <E T="03">Additional limits on the authority.</E> The authority provided under this section does not extend to:</P> <P>(1) The administration of payment limitations under part 1400 of this chapter (§§ 1001 to 1001F of 7 U.S.C. 1308 <E T="03">et seq.</E>);</P> <P>(2) The administration of payment limitations under a conservation program administered by the Secretary; or</P> <P>(3) Highly erodible land and wetland conservation requirements under subtitles B or C of Title XII of the Food Security Act of 1985 (16 U.S.C. 3811 <E T="03">et seq.</E>) as administered under 7 CFR part 12.</P> <P>(d) Relief may not be provided by the SED under this section until a written opinion or written acknowledgment is obtained from OGC that grounds exist for determination that the program participant has, in good faith, detrimentally relied on the guidance or actions of an authorized FSA representative in accordance with the provisions of this subpart, or that the producer otherwise failed, in good faith, to fully comply with the requirements of the program and that the granting of the relief is within the lawful authority of the SED.</P> <P>(e) <E T="03">Relation to other authorities.</E> The authority provided under this section is in addition to any other applicable authority that may allow relief. Generally, the SED may, without consultation other than with OGC, decide all matters under $20,000 but those decisions shall not be subject to modification within the Farm Service Agency to the extent provided for under the rules of this section.</P> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 729</EAR> <HD SOURCE="HED">PART 729—PEANUT MARKETING QUOTAS</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>7 U.S.C. 7271; 15 U.S.C. 714b-c; 7 U.S.C. 7959.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>62872, Oct. 9, 2002, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 729.1</SECTNO> <SUBJECT>Applicablity to 1996 through 2001 crops of peanuts.</SUBJECT> <P>Sections 1309 and 1310 of the Farm Security Rural Investment Act of 2002 terminated, beginning with the 2002 crop, the marketing quota and price support program for peanuts. However, 7 CFR part 729, revised as of January 1, 2002 continues to apply to the 1996 through 2001 crops of peanuts.</P> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="88"/> <HD SOURCE="HED">SUBCHAPTER C—REGULATIONS FOR WAREHOUSES</HD> <PART> <EAR>Pt. 735</EAR> <HD SOURCE="HED">PART 735—REGULATIONS FOR THE UNITED STATES WAREHOUSE ACT</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General Provisions</HD> <SECHD>Sec.</SECHD> <SECTNO>735.1</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>735.2</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>735.3</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>735.4</SECTNO> <SUBJECT>Fees.</SUBJECT> <SECTNO>735.5</SECTNO> <SUBJECT>Penalties.</SUBJECT> <SECTNO>735.6</SECTNO> <SUBJECT>Suspension, revocation and liquidation.</SUBJECT> <SECTNO>735.7</SECTNO> <SUBJECT>Return of suspended or revoked certificates of licensing or certificates of authorization.</SUBJECT> <SECTNO>735.8</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>735.9</SECTNO> <SUBJECT>Dispute resolution and arbitration of private parties.</SUBJECT> <SECTNO>735.10</SECTNO> <SUBJECT>Posting of certificates of licensing, certificates of authorization or other USWA documents.</SUBJECT> <SECTNO>735.11</SECTNO> <SUBJECT>Lost or destroyed certificates of licensing, authorization or agreements.</SUBJECT> <SECTNO>735.12</SECTNO> <SUBJECT>Safe keeping of records.</SUBJECT> <SECTNO>735.13</SECTNO> <SUBJECT>Information of violations.</SUBJECT> <SECTNO>735.14</SECTNO> <SUBJECT>Bonding and other financial assurance requirements.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Warehouse Licensing</HD> <SECTNO>735.100</SECTNO> <SUBJECT>Application.</SUBJECT> <SECTNO>735.101</SECTNO> <SUBJECT>Financial records and reporting requirements.</SUBJECT> <SECTNO>735.102</SECTNO> <SUBJECT>Financial assurance requirements.</SUBJECT> <SECTNO>735.103</SECTNO> <SUBJECT>Amendments to license.</SUBJECT> <SECTNO>735.104</SECTNO> <SUBJECT>Insurance requirements.</SUBJECT> <SECTNO>735.105</SECTNO> <SUBJECT>Care of agricultural products.</SUBJECT> <SECTNO>735.106</SECTNO> <SUBJECT>Excess storage and transferring of agricultural products.</SUBJECT> <SECTNO>735.107</SECTNO> <SUBJECT>Warehouse charges and tariffs.</SUBJECT> <SECTNO>735.108</SECTNO> <SUBJECT>Inspections and examinations of warehouses.</SUBJECT> <SECTNO>735.109</SECTNO> <SUBJECT>Disaster loss to be reported.</SUBJECT> <SECTNO>735.110</SECTNO> <SUBJECT>Conditions for delivery of agricultural products.</SUBJECT> <SECTNO>735.111</SECTNO> <SUBJECT>Fair treatment.</SUBJECT> <SECTNO>735.112</SECTNO> <SUBJECT>Terminal and futures contract markets</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Inspectors, Samplers, Classifiers, and Weighers</HD> <SECTNO>735.200</SECTNO> <SUBJECT>Service licenses.</SUBJECT> <SECTNO>735.201</SECTNO> <SUBJECT>Agricultural product certificates; format.</SUBJECT> <SECTNO>735.202</SECTNO> <SUBJECT>Standards of grades for other agricultural products.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Warehouse Receipts</HD> <SECTNO>735.300</SECTNO> <SUBJECT>Warehouse receipt requirements.</SUBJECT> <SECTNO>735.301</SECTNO> <SUBJECT>Notification requirements.</SUBJECT> <SECTNO>735.302</SECTNO> <SUBJECT>Paper warehouse receipts.</SUBJECT> <SECTNO>735.303</SECTNO> <SUBJECT>Electronic warehouse receipts.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Electronic Providers</HD> <SECTNO>735.400</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>735.401</SECTNO> <SUBJECT>Electronic warehouse receipt and USWA electronic document providers.</SUBJECT> <SECTNO>735.402</SECTNO> <SUBJECT>Providers of other electronic documents.</SUBJECT> <SECTNO>735.403</SECTNO> <SUBJECT>Audits.</SUBJECT> <SECTNO>735.404</SECTNO> <SUBJECT>Schedule of charges and rates.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>7 U.S.C. 241 <E T="03">et seq.</E> </P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>67 FR 50763, Aug. 5, 2002, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—General Provisions</HD> <SECTION> <SECTNO>§ 735.1</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>(a) The regulations of this part set forth the terms and conditions under which the Secretary of Agriculture through the Farm Service Agency (FSA) will administer the United States Warehouse Act (USWA or the Act) and sets forth the standards and the terms and conditions a participant must meet for eligibility to act under the USWA. The extent the provisions of this part are more restrictive, or more lenient, with respect to the same activities governed by State law, the provisions of this part shall prevail.</P> <P>(b) Additional terms and conditions may be set forth in applicable licensing agreements, provider agreements and other documents.</P> <P>(c) Compliance with State laws relating to the warehousing, grading, weighing, storing, merchandising or other similar activities is not required with respect to activities engaged in by a warehouse operator in a warehouse subject to a license issued in accordance with this part.</P> </SECTION> <SECTION> <SECTNO>§ 735.2</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) FSA will administer all provisions and activities regulated under the Act under the general direction and supervision of the FSA's Deputy Administrator, Commodity Operations (DACO), or a designee.</P> <P>(b) DACO may waive or modify the licensing or authorization requirements or deadlines in cases where lateness or <PRTPAGE P="89"/>failure to meet such requirements does not adversely affect the licensing or authorizations operated under the Act.</P> <P>(c) DACO will provide affected licensees or authorized providers with changes to their licensing or provider agreements before the effective date.</P> <P>(d) Licensing and authorization agreement updates will be available at:</P> <P>(1) DACO's USWA website, and</P> <P>(2) The following address: Deputy Administrator, Commodity Operations, Farm Service Agency, United States Department of Agriculture, STOP 0550, 1400 Independence Avenue, SW, Washington, DC 20250-0550.</P> </SECTION> <SECTION> <SECTNO>§ 735.3</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>Words used in this part will be applicable to the activities authorized by this part and will be used in all aspects of administering the Act.</P> <P> <E T="03">Access</E> means the ability, when authorized, to read, change, and transfer warehouse receipts or other applicable document information retained in a central filing system.</P> <P> <E T="03">Agricultural product</E> means an agriculturally-produced product stored or handled for the purposes of interstate or foreign commerce, including a processed product of such agricultural product, as determined by DACO.</P> <P> <E T="03">Central filing system (CFS)</E> means an electronic system operated and maintained by a provider, as a disinterested third party, authorized by DACO where information relating to warehouse receipts, USWA documents and other electronic documents is recorded and maintained in a confidential and secure fashion independent of any outside influence or bias in action or appearance.</P> <P> <E T="03">Certificate</E> means a USWA document that bears specific assurances under the Act or warrants a person to operate or perform in a certain manner and sets forth specific responsibilities, rights, and privileges granted to the person under the Act.</P> <P> <E T="03">Control of the facility</E> means ultimate responsibility for the operation and integrity of a facility by ownership, lease, or operating agreement.</P> <P> <E T="03">Department</E> means the Department of Agriculture.</P> <P> <E T="03">Electronic document</E> means any document that is generated, sent, received, or stored by electronic, optical, or similar means, including, but not limited to, electronic data interchange, advanced communication methods, electronic mail, telegram, telex, or telecopy.</P> <P> <E T="03">Electronic warehouse receipt</E> (EWR) means a warehouse receipt that is authorized by DACO to be issued or transmitted under the Act in the form of an electronic document.</P> <P> <E T="03">Examiner</E> means an individual designated by DACO for the purpose of examining warehouses or for any other activities authorized under the Act.</P> <P> <E T="03">Financial assurance</E> means the surety or other financial obligation authorized by DACO that is a condition of receiving a license or authorization under the Act.</P> <P> <E T="03">Force majeure</E> means severe weather conditions, fire, explosion, flood, earthquake, insurrection, riot, strike, labor dispute, act of civil or military, non-availability of transportation facilities, or any other cause beyond the control of the warehouse operator or provider that renders performance impossible.</P> <P> <E T="03">Holder</E> means a person that has possession in fact or by operation of law of a warehouse receipt, USWA electronic document, or any electronic document.</P> <P> <E T="03">License</E> means a license issued under the Act by DACO.</P> <P> <E T="03">Licensing agreement</E> means the document and any amendment or addenda to such agreement executed by the warehouse operator and FSA specifying licensing terms and conditions specific to the warehouse operator and the agricultural product licensed to be stored.</P> <P> <E T="03">Non-storage agricultural product</E> means an agricultural product received temporarily into a warehouse for conditioning, transferring or assembling for shipment, or lots of an agricultural product moving through a warehouse for current merchandising or milling use, against which no warehouse receipts are issued and no storage charges assessed.</P> <P> <E T="03">Official Standards of the United States</E> means the standards of the quality or condition for an agricultural product, fixed and established under (7 U.S.C. 51) the United States Cotton Standards Act, (7 U.S.C. 71) the United States <PRTPAGE P="90"/>Grain Standards Act, (7 U.S.C. 1622) the Agricultural Marketing Act of 1946, or other applicable official United States Standards.</P> <P> <E T="03">Other electronic documents</E> (OED) means those electronic documents, other than an EWR or USWA electronic document, that may be issued or transferred, related to the shipment, payment or financing of agricultural products that DACO has authorized for inclusion in a provider's CFS.</P> <P> <E T="03">Person</E> means a person as set forth in 1 U.S.C. 1, a State; or a political subdivision of a State.</P> <P> <E T="03">Provider</E> means a person authorized by DACO, as a disinterested third party, which maintains one or more confidential and secure electronic systems independent of any outside influence or bias in action or appearance.</P> <P> <E T="03">Provider agreement</E> means the document and any amendment or addenda to such agreement executed by the provider and FSA that sets forth the provider's responsibilities concerning the provider's operation or maintenance of a CFS.</P> <P> <E T="03">Receipt</E> means a warehouse receipt issued in accordance with the Act, including an electronic warehouse receipt.</P> <P> <E T="03">Schedule of charges</E> means the tariff or uniform rate or amount charged by an authorized person for specific services offered or rendered under the Act.</P> <P> <E T="03">Schedule of fees</E> means the fees charged and assessed by FSA for licensing, provider agreements or services furnished under the Act to help defray the costs of administering the Act, and as such are shown in a schedule of fees attached to the licensing or provider agreement.</P> <P> <E T="03">Service license</E> means the document and any amendment to such document, issued under the Act by DACO to individuals certified competent by the licensed warehouse operator to perform inspection, sampling, grading classifying, or weighing services according to established standards and procedures, set forth in § 735.202, at the specific warehouse license.</P> <P> <E T="03">Stored agricultural products</E> means all agricultural products received into, stored within, or delivered out of the warehouse that are not classified as a non-storage agricultural product under this part.</P> <P> <E T="03">User</E> means a person that uses a provider's CFS.</P> <P> <E T="03">USWA electronic document</E> means a USWA electronic document initiated by DACO to be issued, transferred or transmitted that is not identified as an EWR or OED in the appropriate licensing or provider agreement or as determined by DACO.</P> <P> <E T="03">Warehouse</E> means a structure or other authorized storage facility, as determined by DACO, in which any agricultural product may be stored or handled for the purpose of interstate or foreign commerce.</P> <P> <E T="03">Warehouse capacity</E> means the maximum quantity of an agricultural product that the warehouse will accommodate when stored in a manner customary to the warehouse as determined by DACO.</P> <P> <E T="03">Warehouse operator</E> means a person lawfully engaged in the business of storing or handling agricultural products.</P> <P> <E T="03">Warehousing activities and practices</E> means any legal, operational, managerial or financial duty that a warehouse operator has regarding an agricultural product.</P> </SECTION> <SECTION> <SECTNO>§ 735.4</SECTNO> <SUBJECT>Fees.</SUBJECT> <P>(a) FSA will assess persons covered by the Act fees to cover the costs of administering the Act.</P> <P>(b) Warehouse operators, licensees, applicants, or providers must pay:</P> <P>(1) An annual fee as provided in the applicable licensing or provider agreement; and</P> <P>(2) Fees that FSA assesses for specific services, examinations and audits, or as provided in the applicable licensing or provider agreement.</P> <P>(c) The schedule of fees showing the current fees or any annual fee changes will be provided as an addendum to the applicable licensing or provider agreement or/and:</P> <P>(1) Will be available at DACO's USWA Web site, or</P> <P>(2) May be requested at the following address: Deputy Administrator, Commodity Operations, Farm Service Agency, United States Department of <PRTPAGE P="91"/>Agriculture, STOP 0550, 1400 Independence Avenue, SW., Washington, DC 20250-0550.</P> <P>(d) At the sole discretion of DACO, these fees may be waived.</P> </SECTION> <SECTION> <SECTNO>§ 735.5</SECTNO> <SUBJECT>Penalties.</SUBJECT> <P>If a person fails to comply with any requirement of the Act, the regulations set forth in this part or any applicable licensing or provider agreement, DACO may assess, after an opportunity for a hearing as provided in § 735.8, a civil penalty:</P> <P>(a) Of not more than $25,000 per violation, if an agricultural product is not involved in the violation; or</P> <P>(b) Of not more than 100 percent of the value of the agricultural product, if an agricultural product is involved in the violation.</P> </SECTION> <SECTION> <SECTNO>§ 735.6</SECTNO> <SUBJECT>Suspension, revocation and liquidation.</SUBJECT> <P>(a) DACO may, after an opportunity for a hearing as provided in § 735.8, suspend, revoke or liquidate any license or agreement issued under the Act, for any violation of or failure to comply with any provision of the Act, regulations or any applicable licensing or provider agreement.</P> <P>(b) The reasons for a suspension, revocation or liquidation under this part include, but are not limited to:</P> <P>(1) Failure to perform licensed or authorized services as provided in this part or in the applicable licensing or provider agreement;</P> <P>(2) Failure to maintain minimum financial requirements as provided in the applicable licensing or provider agreement;</P> <P>(3) Failure to submit a proper annual financial statement within the established time period as provided in the applicable licensing or provider agreement.</P> <P>(4) Failure to maintain control of the warehouse or provider system.</P> <P>(5) The warehouse operator or provider requests closure, cancellation or liquidation. and</P> <P>(6) Commission of fraud against FSA, any depositor, EWR or OED holder or user, or any other function or operation under this part.</P> <P>(c) FSA retains USWA's full authority over a warehouse operator or provider for one year after such license revocation or provider agreement termination or until satisfaction of any claims filed against such warehouse operator or provider are resolved, whichever is later.</P> <P>(d) Upon DACO's determination that continued operation of a warehouse by a warehouse operator or an electronic provider system by a provider is likely to result in probable loss of assets to storage depositors, or loss of data integrity to EWR or OED holders and users. DACO may immediately suspend, close, or take control and begin an orderly liquidation of such warehouse inventory or provider system data as provided in this part or in the applicable licensing or provider agreement.</P> <P>(e) Any disputes involving probable loss of assets to storage depositors, or loss of data integrity to EWR or OED holders and users will be determined by DACO for the benefit of the depositors, or EWR or OED holders and users and such determinations shall be final.</P> </SECTION> <SECTION> <SECTNO>§ 735.7</SECTNO> <SUBJECT>Return of suspended or revoked certificates of licensing or certificates of authorization.</SUBJECT> <P>(a) When a license issued to a warehouse operator or service license ends or is suspended or revoked by DACO, such certificates of licensing and applicable licensing agreement and certificates of authorization must be immediately surrendered and returned to DACO.</P> <P>(b) When an agreement with a provider ends or is suspended or revoked by DACO, such certificates of authorization and applicable provider agreement must be immediately surrendered to DACO</P> </SECTION> <SECTION> <SECTNO>§ 735.8</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) Any person who is subject to an adverse determination made under the Act may appeal the determination by filing a written request with DACO at the following address: Deputy Administrator, Commodity Operations, Farm Service Agency, United States Department of Agriculture, STOP 0550, 1400 Independence Avenue, SW., Washington, DC 20250-0550.</P> <P>(b) Any person who believes that they have been adversely affected by a <PRTPAGE P="92"/>determination under this part must seek review by DACO within twenty-eight calendar days of such determination, unless provided with notice by DACO of a different deadline.</P> <P>(c) The appeal process set forth in this part is applicable to all licensees and providers under any provision of the Act, regulations or any applicable licensing agreement as follows:</P> <P>(1) DACO will notify the person in writing of the nature of the suspension, revocation or liquidation action;</P> <P>(2) The person must notify DACO of any appeal of its action within twenty-eight calendar days;</P> <P>(3) The appeal and request must state whether:</P> <P>(i) A hearing is requested,</P> <P>(ii) The person will appear in person at such hearing, or</P> <P>(iii) Such hearing will be held by telephone;</P> <P>(4) DACO will provide the person a written acknowledgment of their request to pursue an appeal;</P> <P>(5) When a person requests an appeal and does not request a hearing DACO will allow that person:</P> <P>(i) To submit in writing the reasons why they believe DACO's determination to be in error,</P> <P>(ii) Twenty-eight calendar days from the receipt of the acknowledgment to file any statements and documents in support of their appeal, unless provided with notice by DACO of a different deadline, and</P> <P>(iii) An additional fourteen calendar days to respond to any new issues raised by DACO in response to the person's initial submission, unless provided with notice by DACO of a different deadline;</P> <P>(6) If the person requests to pursue an appeal and requests a hearing, DACO will:</P> <P>(i) Notify the person of the date of the hearing,</P> <P>(ii) Determine the location of the hearing, when the person asks to appear in person,</P> <P>(iii) Notify the person of the location of the hearing,</P> <P>(iv) Afford the person twenty-eight calendar days from the receipt of the notification of the scheduling of the hearing to submit any statements and documents in support of the appeal, unless provided with notice by DACO of a different deadline, and</P> <P>(v) Allow the person an additional fourteen calendar days from the date of the hearing to submit any additional material, unless provided with notice by DACO of a different deadline;</P> <P>(7) Determinations of DACO will be final and no further appeal within USDA will be available except as may be specified in the final determination of DACO; and</P> <P>(8) A person may not initiate an action in any court of competent jurisdiction concerning a determination made under the Act prior to the exhaustion of the appeal process set forth in this section.</P> </SECTION> <SECTION> <SECTNO>§ 735.9</SECTNO> <SUBJECT>Dispute resolution and arbitration of private parties.</SUBJECT> <P>(a) A person may initiate legal action in any court of competent jurisdiction concerning a claim for noncompliance or an unresolved dispute with respect to activities authorized under the Act.</P> <P>(b) Any claim for noncompliance or an unresolved dispute between a warehouse operator or provider and another party with respect to activities authorized under the Act may be resolved by the parties through mutually agreed-upon arbitration procedures or as may be prescribed in the applicable licensing or provider agreement. No arbitration determination or award will affect DACO's authority under the Act.</P> <P>(c) In no case will USDA provide assistance or representation to parties involved in an arbitration proceeding arising with respect to activities authorized under the Act.</P> </SECTION> <SECTION> <SECTNO>§ 735.10</SECTNO> <SUBJECT>Posting of certificates of licensing, certificates of authorization or other USWA documents.</SUBJECT> <P>(a) The warehouse operator must post, in a conspicuous place in the principal place where warehouse receipts are issued, any applicable certificate furnished by DACO that the warehouse operator is an authorized licensee under the Act.</P> <P>(b) Immediately upon receipt of their certificate of service licensing or any modification or extension thereof under the Act, the licensee and warehouse operator must jointly post the <PRTPAGE P="93"/>same, and thereafter, except as otherwise provided in the regulations in this part or as prescribed in the applicable licensing agreement, keep such certificate of licensing conspicuously posted in the office where all or most of the services are done, or in such place as may be designated by DACO.</P> <P>(c) The provider must post, in a conspicuous place in the principal place of business, any applicable certificate of authorization furnished by DACO that the provider is authorized to offer and provide specific services under the Act.</P> </SECTION> <SECTION> <SECTNO>§ 735.11</SECTNO> <SUBJECT>Lost or destroyed certificates of licensing, authorization or agreements.</SUBJECT> <P>FSA will replace lost or destroyed certificates of licensing, certificate of authorization or applicable agreement upon satisfactory proof of loss or destruction. FSA will mark such certificates or agreements as duplicates.</P> </SECTION> <SECTION> <SECTNO>§ 735.12</SECTNO> <SUBJECT>Safe keeping of records.</SUBJECT> <P>Each warehouse operator or provider must take necessary precautions to safeguard all records, either paper or electronic format, from destruction.</P> </SECTION> <SECTION> <SECTNO>§ 735.13</SECTNO> <SUBJECT>Information of violations.</SUBJECT> <P>Every person licensed or authorized under the Act must immediately furnish DACO any information they may have indicating that any provision of the Act or the regulations in this part has been violated.</P> </SECTION> <SECTION> <SECTNO>§ 735.14</SECTNO> <SUBJECT>Bonding and other financial assurance requirements.</SUBJECT> <P>(a) As a condition of receiving a license or authorization under the Act, the person applying for the license or authorization must execute and file with DACO a bond or provide such other financial assurance as DACO determines appropriate to secure the person's compliance with the Act.</P> <P>(b) Such bond or assurance must be for a period of not less than one year and in such amount as required by DACO.</P> <P>(c) Failure to provide for, or renew, a bond or a financial assurance instrument will result in the immediate and automatic revocation of the warehouse operator's license or provider's agreement.</P> <P>(d) If DACO determines that a previously accepted bond or other financial assurance is insufficient, DACO may immediately suspend or revoke the license or authorization covered by the bond or other financial assurance if the person that filed the bond or other financial assurance does not provide such additional bond or other financial assurance as DACO determines appropriate.</P> <P>(e) To qualify as a suitable bond or other financial assurance, the entity issuing the bond or other financial assurance must be subject to service of process in lawsuits or legal actions on the bond or other financial assurance in the State in which the warehouse is located.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Warehouse Licensing</HD> <SECTION> <SECTNO>§ 735.100</SECTNO> <SUBJECT>Application.</SUBJECT> <P>(a) An applicant for a license must submit to DACO information and documents determined by DACO to be sufficient to conclude that the applicant can comply with the provisions of the Act. Such documents must include a current review or an audit-level financial statement prepared according to generally accepted accounting standards as defined by the American Institute of Certified Public Accountants. For any entity that is not an individual, a document that establishes proof of the existence of the entity, such as:</P> <P>(1) For a partnership, an executed partnership agreement; and</P> <P>(2) For a corporation:</P> <P>(i) Articles of incorporation certified by the Secretary of State of the applicable State of incorporation;</P> <P>(ii) Bylaws; and</P> <P>(iii) Permits to do business; and</P> <P>(3) For a limited partnership, an executed limited partnership agreement; and</P> <P>(4) For a limited liability company:</P> <P>(i) Articles of organization or similar documents; and</P> <P>(ii) Operating agreement or similar agreement.</P> <P>(b) The warehouse facilities of an operator licensed under the Act must, as determined by DACO, be:<PRTPAGE P="94"/> </P> <P>(1) Physically and operationally suitable for proper storage of the applicable agricultural product or agricultural products specified in the license;</P> <P>(2) Operated according to generally accepted warehousing activities and practices in the industry for the applicable agricultural product or agricultural products stored in the facility; and</P> <P>(3) Subject to the warehouse operator's control of the facility including all contiguous storage space with respect to such facilities.</P> <P>(c) As specified in individual licensing agreements, a warehouse operator must:</P> <P>(1) Meet the basic financial requirements determined by DACO; and</P> <P>(2) Meet the net worth requirements determined by DACO;</P> <P>(d) In order to obtain a license, the warehouse operator must correct any exceptions made by the warehouse examiner at the time of the original warehouse examination.</P> <P>(e) DACO may issue a license for the storage of two or more agricultural products in a single warehouse as provided in the applicable licensing agreements. The amount of the bond or financial assurance, net worth, and inspection and license fees will be determined by DACO in accordance with the licensing agreements applicable to the specific agricultural product, based upon the warehouses' total capacity for storing such product, that would require:</P> <P>(1) The largest bond or financial assurance;</P> <P>(2) The greatest amount of net worth; and</P> <P>(3) The greatest amount of fees.</P> </SECTION> <SECTION> <SECTNO>§ 735.101</SECTNO> <SUBJECT>Financial records and reporting requirements.</SUBJECT> <P>(a) Warehouse operators must maintain complete, accurate, and current financial records that must be available to DACO for review or audit at DACO's request as may be prescribed in the applicable licensing agreement.</P> <P>(b) Warehouse operators must, annually, present a financial statement as may be prescribed in the applicable licensing agreement to DACO.</P> </SECTION> <SECTION> <SECTNO>§ 735.102</SECTNO> <SUBJECT>Financial assurance requirements.</SUBJECT> <P>(a) Warehouse operators must file with DACO financial assurances approved by DACO consisting of:</P> <P>(1) A warehouse operator's bond; or</P> <P>(2) Obligations that are unconditionally guaranteed as to both interest and principal by the United States, in a sum equal at their par value to the amount of the bond otherwise required to be furnished, together with an irrevocable power of attorney authorizing DACO to collect, sell, assign and transfer such obligations in case of any default in the performance of any of the conditions required in the licensing agreement; or</P> <P>(3) An irrevocable letter of credit issued in the favor of DACO with a term of not less than two years; or</P> <P>(4) A certificate of participation in, and coverage by, an indemnity or insurance fund as approved by DACO, established and maintained by a State, backed by the full faith and credit of the applicable State, which guarantees depositors of the licensed warehouse full indemnification for the breach of any obligation of the licensed warehouse operator under the terms of the Act. If a warehouse operator files a bond or financial assurance in the form of a certification of participation in an indemnity or insurance fund, the certification may only be used to satisfy any deficiencies in assets above the minimum net worth requirement as prescribed in the applicable licensing agreement. A certificate of participation and coverage in this fund must be furnished to DACO annually; or</P> <P>(5) Other alternative instruments and forms of financial assurance approved by DACO as may be prescribed in the applicable licensing agreement.</P> <P>(b) The warehouse operator may not withdraw obligations required under this section until one year after license termination or until satisfaction of any claims against the obligations, whichever is later.</P> </SECTION> <SECTION> <SECTNO>§ 735.103</SECTNO> <SUBJECT>Amendments to license.</SUBJECT> <P>FSA will issue an amended license upon:</P> <P>(a) Receipt of forms prescribed and furnished by DACO outlining the requested changes to the license;<PRTPAGE P="95"/> </P> <P>(b) Payment of applicable licensing and examination fees;</P> <P>(c) Receipt of bonding or other financial assurance if required in the applicable licensing agreement; and</P> <P>(d) Receipt of a report on the examination of the proposed facilities pending inclusion or exclusion, if determined necessary by DACO.</P> </SECTION> <SECTION> <SECTNO>§ 735.104</SECTNO> <SUBJECT>Insurance requirements.</SUBJECT> <P>Each warehouse operator must comply fully with the terms of insurance policies or contracts covering their licensed warehouse and all products stored therein, and must not commit any acts, nor permit others to do anything, that might impair or invalidate such insurance.</P> </SECTION> <SECTION> <SECTNO>§ 735.105</SECTNO> <SUBJECT>Care of agricultural products.</SUBJECT> <P>Each warehouse operator must at all times, including during any period of suspension of their license, exercise such care in regard to stored and non-storage agricultural products in their custody as required in the applicable licensing agreement.</P> </SECTION> <SECTION> <SECTNO>§ 735.106</SECTNO> <SUBJECT>Excess storage and transferring of agricultural products.</SUBJECT> <P>(a) If at any time a warehouse operator stores an agricultural product in a warehouse subject to a license issued under the Act in excess of the warehouse capacity for which it is licensed, such warehouse operator must immediately notify DACO of such excess storage and the reason for the storage.</P> <P>(b) A warehouse operator who desires to transfer stored agricultural products to another warehouse may do so either by physical movement, by other methods as may be provided in the applicable licensing agreement, or as authorized by DACO.</P> </SECTION> <SECTION> <SECTNO>§ 735.107</SECTNO> <SUBJECT>Warehouse charges and tariffs.</SUBJECT> <P>(a) A warehouse operator must not make any unreasonable or exorbitant charge for services rendered.</P> <P>(b) A warehouse operator must follow the terms and conditions for each new or revised warehouse tariff or schedule of charges and rates as prescribed in the applicable licensing agreement.</P> </SECTION> <SECTION> <SECTNO>§ 735.108</SECTNO> <SUBJECT>Inspections and examinations of warehouses.</SUBJECT> <P>(a) Warehouse operators must permit any agent of the Department to enter and inspect or examine, on any business day during the usual hours of business, any licensed warehouse, the offices of the warehouse operator, the books, records, papers, and accounts.</P> <P>(b) Routine and special inspections and examinations will be unannounced.</P> <P>(c) Warehouse operators must provide safe access to all storage facilities.</P> <P>(d) Warehouse operators must inform any agent of the Department, upon arrival, of any hazard.</P> <P>(e) Agents of the Department must accomplish inspections and examinations of warehouses in a manner that is efficient and cost-effective without jeopardizing any inspection and examination integrity.</P> </SECTION> <SECTION> <SECTNO>§ 735.109</SECTNO> <SUBJECT>Disaster loss to be reported.</SUBJECT> <P>If at any time a disaster or loss occurs at or within any licensed warehouse, the warehouse operator must report immediately the occurrence of the disaster or loss and the extent of damage, to DACO.</P> </SECTION> <SECTION> <SECTNO>§ 735.110</SECTNO> <SUBJECT>Conditions for delivery of agricultural products.</SUBJECT> <P>(a) In the absence of a lawful excuse, a warehouse operator will, without unnecessary delay, deliver the agricultural product stored or handled in the warehouse on a demand made by:</P> <P>(1) The holder of the warehouse receipt for the agricultural product; or</P> <P>(2) The person that deposited the agricultural product, if no warehouse receipt has been issued.</P> <P>(b) Prior to delivery of the agricultural product, payment of the accrued charges associated with the storage or handling of the agricultural product, including satisfaction of the warehouse operator's lien, must be made if requested by the warehouse operator.</P> <P>(c) When the holder of a warehouse receipt requests delivery of an agricultural product covered by the warehouse receipt, the holder must surrender the warehouse receipt to the warehouse operator before obtaining the agricultural product.</P> <P>(d) A warehouse operator must cancel each warehouse receipt surrendered to <PRTPAGE P="96"/>the warehouse operator upon the delivery of the agricultural product for which the warehouse receipt was issued and in accordance with the applicable licensing agreement.</P> <P>(e) For the purpose of this part, unless prevented from doing so by force majeure, a warehouse operator will deliver or ship such agricultural products stored or handled in their warehouse as prescribed in the applicable licensing agreement.</P> </SECTION> <SECTION> <SECTNO>§ 735.111</SECTNO> <SUBJECT>Fair treatment.</SUBJECT> <P>(a) Contingent upon the capacity of a warehouse, a warehouse operator will deal in a fair and reasonable manner with persons storing, or seeking to store, an agricultural product in the warehouse if the agricultural product is:</P> <P>(1) Of the kind, type, and quality customarily stored or handled in the area in which the warehouse is located;</P> <P>(2) Tendered to the warehouse operator in a suitable condition for warehousing; and</P> <P>(3) Tendered in a manner that is consistent with the ordinary and usual course of business.</P> <P>(b) Nothing in this section will prohibit a warehouse operator from entering into an agreement with a depositor of an agricultural product to allocate available storage space.</P> </SECTION> <SECTION> <SECTNO>§ 735.112</SECTNO> <SUBJECT>Terminal and futures contract markets.</SUBJECT> <P>(a) DACO may issue service licenses to weigh-masters or their deputies to perform services relating to warehouse receipts that are deliverable in satisfaction of futures contracts in such contract markets or as may be prescribed in any applicable licensing agreement.</P> <P>(b) DACO may authorize a registrar of warehouse receipts issued for an agricultural product in a warehouse licensed under the Act that operates in any terminal market or in any futures contract market the official designated by officials of the State in which such market is located if such individual is not:</P> <P>(1) An owner or employee of the licensed warehouse;</P> <P>(2) The owner of, or an employee of the owner of, such agricultural product deposited in any such licensed warehouse; or</P> <P>(3) As may be prescribed in any applicable licensing or provider agreement.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Inspectors, Samplers, Classifiers, and Weighers</HD> <SECTION> <SECTNO>§ 735.200</SECTNO> <SUBJECT>Service licenses.</SUBJECT> <P>(a) FSA may issue to a person a license for:</P> <P>(1) Inspection of any agricultural product stored or handled in a warehouse subject to the Act;</P> <P>(2) Sampling of such an agricultural product;</P> <P>(3) Classification of such an agricultural product according to condition, grade, or other class and certify the condition, grade, or other class of the agricultural product;</P> <P>(4) Weighing of such an agricultural product and certify the weight of the agricultural product; or</P> <P>(5) Performing two or more services specified in paragraphs (a)(1), (a)(2), (a)(3) or (a)(4) of this section.</P> <P>(b) Each person seeking a license to perform activities described in this section must submit an application on forms furnished by DACO that contain, at a minimum, the following information:</P> <P>(1) The name, location and license number of the warehouses where the applicant would perform such activities;</P> <P>(2) A statement from the warehouse operator that the applicant is competent and authorized to perform such activities at specific locations; and</P> <P>(3) Evidence that the applicant is competent to inspect, sample, classify, according to grade or weigh the agricultural product.</P> <P>(c) The warehouse operator will promptly notify DACO in writing of any changes with respect to persons authorized to perform such activities at the licensed warehouse.</P> </SECTION> <SECTION> <SECTNO>§ 735.201</SECTNO> <SUBJECT>Agricultural product certificates; format.</SUBJECT> <P>Each inspection, grade, class, weight or combination certificate issued under the Act by a licensee to perform such services must be:</P> <P>(a) In a format prescribed by DACO;<PRTPAGE P="97"/> </P> <P>(b) Issued and maintained in a consecutive order; and</P> <P>(c) As prescribed in the applicable licensing or provider agreement and authorized by DACO.</P> </SECTION> <SECTION> <SECTNO>§ 735.202</SECTNO> <SUBJECT>Standards of grades for other agricultural products.</SUBJECT> <P>Official Standards of the United States for any kind, class or grade of an agricultural product to be inspected must be used if such standards exist. Until Official Standards of the United States are fixed and established for the kind of agricultural product to be inspected, the kind, class and grade of the agricultural product must be stated, subject to the approval of DACO. If such standards do not exist for such an agricultural product, the following will be used:</P> <P>(a) State standards established in the State in which the warehouse is located, (b) In the absence of any State standards, in accordance with the standards, if any, adopted by the local board of trade, chamber of commerce, or by the agricultural product trade generally in the locality in which the warehouse is located, or</P> <P>(c) In the absence of the standards set forth in paragraphs (a) and (b) of this section, in accordance with any standards approved for the purpose by DACO.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Warehouse Receipts</HD> <SECTION> <SECTNO>§ 735.300</SECTNO> <SUBJECT>Warehouse receipt requirements.</SUBJECT> <P>(a) Warehouse receipts may be:</P> <P>(1) Negotiable or non-negotiable;</P> <P>(2) For a single unit, multiple units, identity preserved or commingled lot; and</P> <P>(3) In a paper or electronic format that, besides complying with the requirements of the Act, must be in a format as prescribed in the applicable licensing or provider agreement and authorized by DACO.</P> <P>(b) The warehouse operator must:</P> <P>(1) At the request of a depositor of an agricultural product stored or handled in a warehouse licensed under the Act, issue a warehouse receipt to the depositor;</P> <P>(2) Not issue a warehouse receipt for an agricultural product unless the agricultural product is actually stored in their warehouse at the time of issuance;</P> <P>(3) Not issue a warehouse receipt until the quality, condition and weight of such an agricultural product is ascertained by a licensed inspector and weigher;</P> <P>(4) Not directly or indirectly compel or attempt to compel the depositor to request the issuance of a warehouse receipt omitting the statement of quality or condition;</P> <P>(5) Not issue an additional warehouse receipt under the Act for a specific identity-preserved or commingled agricultural product lot (or any portion thereof) if another warehouse receipt representing the same specific identity-preserved or commingled lot of the agricultural product is outstanding. No two warehouse receipts issued by a warehouse operator may have the same warehouse receipt number or represent the same agricultural product lot;</P> <P>(6) When issuing a warehouse receipt and purposefully omitting any information, notate the blank to show such intent;</P> <P>(7) Not deliver any portion of an agricultural product for which they have issued a negotiable warehouse receipt until the warehouse receipt has been surrendered to them and canceled as prescribed in the applicable licensing agreement;</P> <P>(8) Not deliver more than 90% of the receipted quantity of an agricultural product for which they have issued a non-negotiable warehouse receipt until such warehouse receipt has been surrendered or the depositor or the depositor's agent has provided a written order for the agricultural product and the warehouse receipt surrendered upon final delivery; and</P> <P>(9) Deliver, upon proper presentation of a warehouse receipt for any agricultural product, and payment or tender of all advances and charges, to the depositor or lawful holder of such warehouse receipt the agricultural product of such identity, quantity, grade and condition as set forth in such warehouse receipt.</P> <P>(c) In the case of a lost or destroyed warehouse receipt, a new warehouse receipt upon the same terms, subject to the same conditions, and bearing on its <PRTPAGE P="98"/>face the number and the date of the original warehouse receipt may be issued.</P> </SECTION> <SECTION> <SECTNO>§ 735.301</SECTNO> <SUBJECT>Notification requirements.</SUBJECT> <P>Warehouse operators must file with DACO the name and genuine signature of each person authorized to sign warehouse receipts for the licensed warehouse operator, and will promptly notify DACO of any changes with respect to persons authorized to sign.</P> </SECTION> <SECTION> <SECTNO>§ 735.302</SECTNO> <SUBJECT>Paper warehouse receipts.</SUBJECT> <P>Paper warehouse receipts must be issued as follows:</P> <P>(a) On distinctive paper specified by DACO;</P> <P>(b) Printed by a printer authorized by DACO; and</P> <P>(c) Issued, identified and maintained in a consecutive order.</P> </SECTION> <SECTION> <SECTNO>§ 735.303</SECTNO> <SUBJECT>Electronic warehouse receipts.</SUBJECT> <P>(a) Warehouse operators issuing EWR under the Act may issue EWR's for the agricultural product stored in their warehouse. Warehouse operators issuing EWR's under the Act must:</P> <P>(1) Only issue EWR's through one FSA-authorized provider annually;</P> <P>(2) Inform DACO of the identity of their provider, when they are a first time user of EWR's, 60 calendar days in advance of issuing an EWR through that provider. DACO may waive or modify this 60-day requirement as set forth in § 735.2(b);</P> <P>(3) Before issuing an EWR, request and receive from FSA a range of consecutive warehouse receipt numbers that the warehouse will use consecutively for issuing their EWR's;</P> <P>(4) When using an authorized provider, issue and cancel all warehouse receipts as EWR's;</P> <P>(5) Cancel an EWR only when they are the holder of the warehouse receipt;</P> <P>(6) Be the holder of an EWR to correct information contained within any required data field;</P> <P>(7) Receive written authorization from FSA at least 30 calendar days before changing providers. Upon authorization, they may request their current provider to transfer their EWR data from its Central Filing System (CFS) to the CFS of the authorized provider whom they select; and</P> <P>(8) Notify all holders of EWR's by inclusion in the CFS at least 30 calendar days before changing providers, unless otherwise required or allowed by FSA.</P> <P>(b) An EWR establishes the same rights and obligations with respect to an agricultural product as a paper warehouse receipt and possesses the following attributes:</P> <P>(1) The holder of an EWR will be entitled to the same rights and privileges as the holder of a paper warehouse receipt.</P> <P>(2) Only the current holder of the EWR may transfer the EWR to a new holder.</P> <P>(3) The identity of the holder must be confidential and included as information for every EWR.</P> <P>(4) Only one person may be designated as the holder of an EWR at any one time.</P> <P>(5) A warehouse operator may not issue an EWR on a specific identity-preserved or commingled lot of agricultural product or any portion thereof while another valid warehouse receipt representing the same specific identity-preserved or commingled lot of agricultural product remains not canceled. No two warehouse receipts issued by a warehouse operator may have the same warehouse receipt number or represent the same agricultural product lot.</P> <P>(6) An EWR may only be issued to replace a paper warehouse receipt if requested by the current holder of the paper warehouse receipt.</P> <P>(7) Holders and warehouse operators may authorize any other user of their provider or the provider itself to act on their behalf with respect to their activities with this provider. This authorization must be in writing, and acknowledged and retained by the warehouse operator and provider.</P> <P>(c) A warehouse operator not licensed under the Act may, at the option of the warehouse operator, issue EWRs in accordance with this subpart, except this option does not apply to a warehouse operator that is licensed under State law to store agricultural products in a warehouse if the warehouse operator elects to issue an EWR under State law.</P> </SECTION> </SUBPART> <SUBPART> <PRTPAGE P="99"/> <HD SOURCE="HED">Subpart E—Electronic Providers</HD> <SECTION> <SECTNO>§ 735.400</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>This subpart sets forth the regulations under which DACO may authorize one or more electronic systems under which:</P> <P>(a) Electronic documents relating to the shipment, payment, and financing of the sale of agricultural products may be issued or transferred; or</P> <P>(b) Electronic receipts may be issued and transferred.</P> </SECTION> <SECTION> <SECTNO>§ 735.401</SECTNO> <SUBJECT>Electronic warehouse receipt and USWA electronic document providers.</SUBJECT> <P>(a) To establish a USWA-authorized system to issue and transfer EWR's and USWA electronic documents, each applicant must submit to DACO information and documents determined by DACO to be sufficient to determine that the applicant can comply with the provisions of the Act. Each provider operating pursuant to this section must meet the following requirements:</P> <P>(1) Have and maintain a net worth as specified in the applicable provider agreement;</P> <P>(2) Maintain two insurance policies; one for “errors and omissions” and another for “fraud and dishonesty.” Each policy's minimum coverage and maximum deductible amounts and applicability of other forms of financial assurances as set forth in § 735.14 will be prescribed in the applicable provider agreement. Each policy must contain a clause requiring written notification to FSA 30 days prior to cancellation or as prescribed by FSA;</P> <P>(3) Submit a current review or an audit level financial statement prepared according to generally accepted accounting standards as defined by the American Institute of Certified Public Accountants;</P> <P>(4) For any entity that is not an individual, a document that establishes proof of the existence, such as:</P> <P>(i) For a partnership, an executed partnership agreement; and</P> <P>(ii) For a corporation:</P> <P>(A) Articles of incorporation certified by the Secretary of State of the applicable State of incorporation;</P> <P>(B) Bylaws; and</P> <P>(C) Permits to do business; and</P> <P>(iii) For a limited partnership, an executed limited partnership agreement; and</P> <P>(iv) For a limited liability company:</P> <P>(A) Articles of organization or similar documents; and</P> <P>(B) Operating agreement or similar agreement.</P> <P>(5) Meet any additional financial requirements as set forth in the applicable provider agreement;</P> <P>(6) Pay user fees annually to FSA, as set and announced annually by FSA prior to April 1 of each calendar year; and</P> <P>(7) Operate a CFS as a neutral third party in a confidential and secure fashion independent of any outside influence or bias in action or appearance.</P> <P>(b) The provider agreement will contain, but not be limited to, these basic elements:</P> <P>(1) Scope of authority;</P> <P>(2) Minimum document and warehouse receipt requirements;</P> <P>(3) Liability;</P> <P>(4) Transfer of records protocol;</P> <P>(5) Records;</P> <P>(6) Conflict of interest requirements;</P> <P>(7) USDA common electronic information requirements;</P> <P>(8) Financial requirements</P> <P>(9) Terms of insurance policies or assurances;</P> <P>(10) Provider's integrity statement;</P> <P>(11) Security audits; and</P> <P>(12) Submission, authorization, approval, use and retention of documents.</P> <P>(c) DACO may suspend or terminate a provider's agreement for cause at any time.</P> <P>(1) Hearings and appeals will be conducted in accordance with procedures as set forth in §§ 735.6 and 735.8.</P> <P>(2) Suspended or terminated providers may not execute any function pertaining to USDA, USWA documents, or USWA or State EWR's during the pendency of any appeal or subsequent to this appeal if the appeal is denied, except as authorized by DACO.</P> <P>(3) The provider or DACO may terminate the provider agreement without cause solely by giving the other party written notice 60 calendar days prior to termination.</P> <P>(d) Each provider agreement will be automatically renewed annually on <PRTPAGE P="100"/>April 30th as long as the provider complies with the terms contained in the provider agreement, the regulations in this subpart, and the Act.</P> </SECTION> <SECTION> <SECTNO>§ 735.402</SECTNO> <SUBJECT>Providers of other electronic documents.</SUBJECT> <P>(a) To establish a USWA-authorized system to issue and transfer OED, each applicant must submit to DACO information and documents determined by DACO to be sufficient to determine that the applicant can comply with the provisions of the Act. Each provider operating pursuant to this section must meet the following requirements:</P> <P>(1) Have and maintain a net worth as specified in the applicable provider agreement;</P> <P>(2) Maintain two insurance policies; one for 'errors and omissions' and another for 'fraud and dishonesty'. Each policy's minimum coverage and maximum deductible amounts and applicability of other forms of financial assurances as set forth in § 735.14 will be prescribed in the applicable provider agreement. Each policy must contain a clause requiring written notification to FSA 30 days prior to cancellation or as prescribed by FSA;</P> <P>(3) Submit a current review or an audit level financial statement prepared according to generally accepted accounting standards as defined by the American Institute of Certified Public Accountants;</P> <P>(4) For any entity that is not an individual, a document that establishes proof of the existence, such as:</P> <P>(i) For a partnership, an executed partnership agreement; and</P> <P>(ii) For a corporation:</P> <P>(A) Articles of incorporation certified by the Secretary of State of the applicable State of incorporation;</P> <P>(B) Bylaws; and</P> <P>(C) Permits to do business; and</P> <P>(iii) For a limited partnership, an executed limited partnership agreement; and</P> <P>(iv) For a limited liability company:</P> <P>(A) Articles of organization or similar documents; and</P> <P>(B) Operating agreement or similar agreement.</P> <P>(5) Meet any additional financial requirements as set forth in the applicable provider agreement;</P> <P>(6) Pay user fees annually to FSA, as set and announced annually by FSA prior to April 1 of each calendar year; and</P> <P>(7) Operate a CFS as a neutral third party in a confidential and secure fashion independent of any outside influence or bias in action or appearance.</P> <P>(b) The provider agreement will contain, but not be limited to, these basic elements:</P> <P>(1) Scope of authority;</P> <P>(2) Minimum document and warehouse receipt requirements;</P> <P>(3) Liability;</P> <P>(4) Transfer of records protocol;</P> <P>(5) Records;</P> <P>(6) Conflict of interest requirements;</P> <P>(7) USDA common electronic information requirements;</P> <P>(8) Financial requirements;</P> <P>(9) Terms of insurance policies or assurances;</P> <P>(10) Provider's integrity statement;</P> <P>(11) Security audits; and</P> <P>(12) Submission, authorization, approval, use and retention of documents.</P> <P>(c) DACO may suspend or terminate a provider's agreement for cause at any time.</P> <P>(1) Hearings and appeals will be conducted in accordance with procedures as set forth in §§ 735.6 and 735.8.</P> <P>(2) Suspended or terminated providers may not execute any function pertaining to USDA, USWA documents, USWA or State EWR's or OED's during the pendency of any appeal or subsequent to this appeal if the appeal is denied, except as authorized by DACO.</P> <P>(d) Each provider agreement will be automatically renewed annually on April 30th as long as the provider complies with the terms contained in the provider agreement, the regulations in this subpart, and the Act.</P> <P>(e) In addition to audits prescribed in this section the provider must submit a copy of any audit, examination or investigative report prepared by any Federal regulatory agency with respect to the provider including agencies such as, but not limited to, the Comptroller of the Currency, Department of the Treasury, the Federal Trade Commission, and the Commodity Futures Trading Commission.</P> </SECTION> <SECTION> <PRTPAGE P="101"/> <SECTNO>§ 735.403</SECTNO> <SUBJECT>Audits.</SUBJECT> <P>(a) No later than 120 calendar days following the end of the provider's fiscal year, the provider authorized under §§ 735.401 and 735.402 must submit to FSA an annual audit level financial statement and an electronic data processing audit that meets the minimum requirements as provided in the applicable provider agreement. The electronic data processing audit will be used by DACO to evaluate current computer operations, security, disaster recovery capabilities of the system, and compatibility with other systems authorized by DACO.</P> <P>(b) Each provider will grant the Department unlimited, free access at any time to all records under the provider's control relating to activities conducted under this part and as specified in the applicable provider agreement.</P> </SECTION> <SECTION> <SECTNO>§ 735.404</SECTNO> <SUBJECT>Schedule of charges and rates.</SUBJECT> <P>(a) A provider authorized under §§ 735.401 or 735.402 must furnish FSA with copies of its current schedule of charges and rates for all services as they become effective.</P> <P>(b) Charges and rates assessed any user by the provider must be in effect for a minimum period of one year.</P> <P>(c) Providers must furnish FSA and all users a 60-calendar day advance notice of their intent to change any charges and rates.</P> </SECTION> </SUBPART> </PART> <PART> <RESERVED>PART 743 [RESERVED]</RESERVED> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="102"/> <HD SOURCE="HED">SUBCHAPTER D—SPECIAL PROGRAMS</HD> <PART> <EAR>Pt. 750</EAR> <HD SOURCE="HED">PART 750—SOIL BANK</HD> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>Part 750 (formerly part 485 of title 6), published at 21 FR 6289, Aug. 22, 1956, and redesignated at 26 FR 5788, June 29, 1961, is no longer carried in the Code of Federal Regulations. This deletion does not relieve any person of any obligation or liability incurred under these regulations, nor deprive any person of any rights received or accrued under the provisions of this part. For <E T="04">Federal Register</E> citations affecting this part, see the “List of CFR Sections Affected, 1949-1963, 1964-1972, and 1973-1985,” published in seven separate volumes.</P> </EDNOTE> </PART> <PART> <EAR>Pt. 752</EAR> <HD SOURCE="HED">PART 752—WATER BANK PROGRAM</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>752.1</SECTNO> <SUBJECT>Program objective.</SUBJECT> <SECTNO>752.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>752.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>752.4</SECTNO> <SUBJECT>Geographical applicability.</SUBJECT> <SECTNO>752.5</SECTNO> <SUBJECT>Eligible farm.</SUBJECT> <SECTNO>752.6</SECTNO> <SUBJECT>Land eligible for designation.</SUBJECT> <SECTNO>752.7</SECTNO> <SUBJECT>Use of designated acreage.</SUBJECT> <SECTNO>752.8</SECTNO> <SUBJECT>Water bank program agreement.</SUBJECT> <SECTNO>752.9</SECTNO> <SUBJECT>Agreement period.</SUBJECT> <SECTNO>752.10</SECTNO> <SUBJECT>Awarding water bank agreements.</SUBJECT> <SECTNO>752.11</SECTNO> <SUBJECT>Responsibility of agreement signers.</SUBJECT> <SECTNO>752.12</SECTNO> <SUBJECT>Provisions relating to tenants and sharecroppers.</SUBJECT> <SECTNO>752.13</SECTNO> <SUBJECT>Determination of compliance.</SUBJECT> <SECTNO>752.14</SECTNO> <SUBJECT>Annual payments.</SUBJECT> <SECTNO>752.15</SECTNO> <SUBJECT>Adjustment of annual rates.</SUBJECT> <SECTNO>752.16</SECTNO> <SUBJECT>Refunds or forfeitures for noncompliance.</SUBJECT> <SECTNO>752.17</SECTNO> <SUBJECT>Actions defeating purposes of program.</SUBJECT> <SECTNO>752.18</SECTNO> <SUBJECT>Filing of false claims.</SUBJECT> <SECTNO>752.19</SECTNO> <SUBJECT>Depriving others of payments.</SUBJECT> <SECTNO>752.20</SECTNO> <SUBJECT>Modification of an agreement.</SUBJECT> <SECTNO>752.21</SECTNO> <SUBJECT>Termination of agreements.</SUBJECT> <SECTNO>752.22</SECTNO> <SUBJECT>Transfer of interest in an agreement.</SUBJECT> <SECTNO>752.23</SECTNO> <SUBJECT>Successors-in-interest.</SUBJECT> <SECTNO>752.24</SECTNO> <SUBJECT>Agreement not in conformity with regulations.</SUBJECT> <SECTNO>752.25</SECTNO> <SUBJECT>Performance based upon advice or action of county or State committee.</SUBJECT> <SECTNO>752.26</SECTNO> <SUBJECT>Setoffs and withholdings.</SUBJECT> <SECTNO>752.27</SECTNO> <SUBJECT>Debt collection.</SUBJECT> <SECTNO>752.28</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>752.29</SECTNO> <SUBJECT>Payments not subject to claims.</SUBJECT> <SECTNO>752.30</SECTNO> <SUBJECT>Prohibition against payments.</SUBJECT> <SECTNO>752.31</SECTNO> <SUBJECT>Delegation of authority.</SUBJECT> <SECTNO>752.32</SECTNO> <SUBJECT>Paperwork Reduction Act assigned numbers.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Secs. 2-12, 84 Stat. 1468-1471, as amended (16 U.S.C. 1301-1311).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>48 FR 45528, Oct. 6, 1983, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 752.1</SECTNO> <SUBJECT>Program objective.</SUBJECT> <P>(a) The regulations in this part set forth the terms and conditions for the Water Bank Program. The Secretary is authorized to enter into agreements and make payments to eligible persons in important migratory waterfowl nesting and breeding areas. Specified wetlands identified for the conservation of water or related uses on a conservation plan shall be developed in cooperation with the Soil and Water Conservation District in which the lands are located.</P> <P>(b) The objective of the Water Bank Program (hereinafter referred to in this part as the “program”) is to preserve, restore, and improve the wetlands of the Nation, and thereby: (1) Conserve surface waters, (2) preserve and improve habitat for migratory waterfowl and other wildlife resources, (3) reduce runoff, soil and wind erosion, (4) contribute to flood control, (5) contribute to improved water quality and reduce stream sedimentation, (6) contribute to improved subsurface moisture, (7) reduce acres of new land coming into production and to retire lands now in agricultural production, (8) enhance the natural beauty of the landscape, and (9) promote comprehensive and total water management planning.</P> </SECTION> <SECTION> <SECTNO>§ 752.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(a) <E T="03">Adjacent land</E> means land on a farm which adjoins designated types 1 through 7 wetlands and is considered essential for the protection of the wetland or for the nesting, breeding, or feeding of migratory waterfowl. Adjacent land need not be contiguous to the land designated as wetland, but cannot be located more than one quarter of a mile away. Types 1 and 2 wetlands may be designated as adjacent land rather than wetland if located not more than one quarter mile from types 3 through 7 wetlands.</P> <P>(b) <E T="03">Administrator</E> means the Administrator or Acting Administrator of the Farm Service Agency (FSA), U.S. Department of Agriculture.<PRTPAGE P="103"/> </P> <P>(c) <E T="03">Agreement</E> means a water bank agreement.</P> <P>(d) <E T="03">Conservation plan</E> means a written record of the land user's decisions on the use and management of the wetland and adjacent areas covered by the agreement. The conservation plan is the basis for the agreement. It includes a schedule of conservation treatment and management required to improve, protect, or restore the wetland and to maintain the wetland and adjacent land as a functional wetland unit for the life of the agreement. Conservation treatment and management of the vegetation for wetland protection, wildlife habitat, or other authorized objectives are consistent with the program objectives and priorities.</P> <P>(e) <E T="03">Wetlands</E> means the inland fresh areas described as types 1 through 7 in Circular 39, Wetlands of the United States, as published by the United States Department of the Interior.</P> <P>(f) In the regulations in this part and in all instructions, forms, and documents in connection therewith, all other words and phrases specifically relating to FSA operation shall, unless the context of subject matter otherwise requires, have the meanings assigned to them in the regulations governing reconstitution of farms, allotments and bases, part 719 of this chapter, as amended.</P> <CITA>[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]</CITA> </SECTION> <SECTION> <SECTNO>§ 752.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) The program will be administered under the general supervision of the Administrator, in consultation with the Secretary of the Interior or his designee, and shall be carried out in the field by FSA State and county committees.</P> <P>(b) Members of county committees are authorized to approve water bank agreements on behalf of the Secretary of Agriculture.</P> <P>(c) State and county committees do not have authority to modify or waive any of the provisions of these regulations, or any amendment, supplement, or revision thereto. They do not have authority to modify or waive any of the provisions of any agreement entered into hereunder except to the extent specifically authorized in this part.</P> <CITA>[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]</CITA> </SECTION> <SECTION> <SECTNO>§ 752.4</SECTNO> <SUBJECT>Geographical applicability.</SUBJECT> <P>The program will be applicable in States and counties designated by the Deputy Administrator, State and County Operations, FSA (hereinafter referred to as the “Deputy Administrator”) after consultation with the United States Fish and Wildlife Service, United States Department of the Interior.</P> </SECTION> <SECTION> <SECTNO>§ 752.5</SECTNO> <SUBJECT>Eligible farm.</SUBJECT> <P>A farm is eligible for participation in the program if: (a) At the time the request for an agreement is filed, land on the farm is not covered by a Water Bank Program agreement; (b) the farm contains at least one of the types 3 through 7 wetlands which are identified in a conservation plan developed in cooperation with the Soil and Water Conservation District in which the farm is located; and (c) the farm meets the other requirements specified in this part.</P> </SECTION> <SECTION> <SECTNO>§ 752.6</SECTNO> <SUBJECT>Land eligible for designation.</SUBJECT> <P>(a) Land placed under an agreement shall be specifically identified and designated for the period of the agreement.</P> <P>(b) Land eligible for designation must be: (1) Privately owned inland fresh wetland areas of types 1 through 7 of which at least 2 acres must be types 3 through 7 wetlands with respect to which, in the absence of inclusion in the program, destruction of the wetland character could reasonably be expected; (2) privately owned inland fresh wetland areas of types 1 through 7, which are under a drainage easement with the U.S. Department of the Interior or with a State government which permits agricultural use; or (3) other privately owned land which is adjacent to or within one quarter mile of designated types 1 through 7 wetlands and which is determined by the county committee to be essential for the nesting, breeding, or feeding of migratory waterfowl, or for the protection of wetland.<PRTPAGE P="104"/> </P> <P>(c) The following land is not eligible for designation: (1) Land on which the ownership has changed during the 2-year period preceding the first year of the agreement period unless: (i) The new ownership was acquired by will or succession as a result of the death of the previous owner, or (ii) the land was acquired by the owner or operator to replace eligible land from which he was displaced because of its acquisition by any Federal, State, or other agency having the right of eminent domain. However a new owner shall not be prohibited from entering into an agreement if the person has operated the land to be designated for as long as 2 years preceding the first year of the agreement and has control of such land for the agreement period. The provisions of this subparagraph shall not prohibit the continuation of an agreement by a new owner after an agreement has once been entered into under this part.</P> <P>(2) Land which is set aside or diverted under any other program administered by the Department of Agriculture.</P> <P>(3) Land which is owned by the United States or a State or local government or political subdivision thereof.</P> <P>(4) Land which is harvested in the first year of the agreement period prior to being designated, except for land on which timber is harvested in accordance with § 752.7(g).</P> <P>(5) Types 1 through 7 wetlands which are common to more than one farm unless the portion of a wetland area located on the farm which controls the potential outlet for drainage is placed under agreement. After an agreement has been approved for the farm controlling the outlet for drainage, an agreement may be entered into with any or all other farms for other portions of the common wetland area if all agreements have the same beginning date as the farm controlling the outlet for drainage.</P> <CITA>[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]</CITA> </SECTION> <SECTION> <SECTNO>§ 752.7</SECTNO> <SUBJECT>Use of designated acreage.</SUBJECT> <P>(a) The acreage designated under an agreement shall be maintained for the agreement period in a manner which will preserve, restore or improve the wetland character of the land. Persons entering into an agreement shall devote the adjacent land to conservation uses as specified in the agreement.</P> <P>(b) The designated acreage shall not be drained, burned, filled, or otherwise used in a manner which would destroy the wetland character of the acreage, except that the provisions of this paragraph shall not prohibit the carrying out of management practices which are specified in a conservation plan for the farm which is developed in cooperation with the Soil and Water Conservation District in which the farm is located.</P> <P>(c) The designated acreage shall not be used as a dumping area for draining other wetlands. However, the county committee may authorize the use of the designated area to receive limited drainage waters upon a determination that such use is consistent with the sound management of wetlands and is specified in the conservation plan for the farm.</P> <P>(d) The designated acreage shall not be used: (1) As a source of irrigation water or as acreage for a set-aside, land diversion, acreage reduction or other program, or (2) to meet the conserving base acreage requirement for any other program.</P> <P>(e) No crop shall be harvested from the designated acreage and such acreage shall not be grazed, except as may be specified in the conservation plan for the farm except that the designated acreage may be grazed in the first year of the agreement period prior to the date the agreement is approved.</P> <P>(f) During periods of severe drought, haying of the designated acreage may be approved under specified conditions which are prescribed by the Deputy Administrator in consultation with the Secretary of Interior or his designee.</P> <P>(g) The harvesting of timber products may be permitted but only in accordance with a Forest Management Plan which is included in the conservation plan and which is approved by the State forester or equivalent State official.</P> <CITA>[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]</CITA> </SECTION> <SECTION> <PRTPAGE P="105"/> <SECTNO>§ 752.8</SECTNO> <SUBJECT>Water bank program agreement.</SUBJECT> <P>(a) An agreement shall be executed for each participating farm. The agreement shall be signed by the owner of the designated acreage and any other person who, as landlord, tenant, or share cropper, will share in the payment or has an interest in the designated acreage.</P> <P>(b) There may be more than one agreement for a farm.</P> <P>(c) Each agreement shall be signed by a member of the county committee on behalf of the Secretary.</P> <CITA>[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]</CITA> </SECTION> <SECTION> <SECTNO>§ 752.9</SECTNO> <SUBJECT>Agreement period.</SUBJECT> <P>(a) The agreement period shall be 10 years. The agreement shall become effective on January 1 of the year in which the agreement is approved except that the agreement shall become effective on January 1 of the next succeeding year in cases where, at the time the agreement is approved, the county committee determines that the agreement signers will be unable to comply with the provisions of § 752.7 relating to the use of designated acreage in the year in which such agreement is approved.</P> <P>(b) Subject to a modification of payment rates and such other provisions which may be determined to be desirable, agreements may be renewed for additional periods of 10 years each.</P> </SECTION> <SECTION> <SECTNO>§ 752.10</SECTNO> <SUBJECT>Awarding water bank agreements.</SUBJECT> <P>(a) Persons wishing to be considered for an agreement shall file a request with the county committee indicating the acreage which is to be designated under the agreement. In order to be eligible for participation in the program, such persons must agree to designate: (1) 2 or more acres of types 3 through 7 wetlands, and (2) a total of at least 10 acres consisting of types 1 through 7 wetlands or adjacent land, or any combination thereof, identified in a conservation plan developed in cooperation with the Soil and Water Conservation District in which the farm is located. In addition, the Soil Conservation Service (SCS) must certify that the designated acreage constitutes a viable wetland unit, contains sufficient adjacent land to protect the wetland, and provides essential habitat for the nesting, breeding or feeding of migratory waterfowl. An acreage of less than 10 acres may be designated if the SCS representative recommends acceptance of the acreage and certifies that the area offered for agreement is a good, viable wetland unit and that the acceptance of the acreage would be in accord with the purposes of the program.</P> <P>(b) Persons desiring to participate in the program may agree to designate any additional amount to types 1 through 7 wetlands and adjacent land. However, the maximum acreage of adjacent land which is designated under the agreement with respect to which payment shall be based cannot exceed four times the total acreage of types 3 through 7 wetlands which is designated under the agreement. This maximum acreage restriction may be waived by the State committee if such waiver would further the program objectives.</P> <P>(c) Where funds allocated to the county do not permit accepting all requests which are filed, the county committee may limit the approval of requests for agreements in accordance with instructions issued by the Deputy Administrator.</P> </SECTION> <SECTION> <SECTNO>§ 752.11</SECTNO> <SUBJECT>Responsibility of agreement signers.</SUBJECT> <P>(a) The owner of the designated acreage is responsible for compliance with the agreement and for any refunds or deductions for failure to comply fully with the terms of the agreement while a party to such agreement.</P> <P>(b) Each other person signing the agreement is jointly and severally responsible with the owner for compliance with the agreement and for any refunds or payment reductions which may be required for failure to comply fully with the terms of the agreement while a party to such agreement.</P> </SECTION> <SECTION> <SECTNO>§ 752.12</SECTNO> <SUBJECT>Provisions relating to tenants and sharecroppers.</SUBJECT> <P>(a) No agreement shall be approved if it appears that the owner, landlord, or <PRTPAGE P="106"/>operator has (1) not afforded the tenants and sharecroppers having an interest in the designated acreage an opportunity to participate in the program, or (2) adopted any device or scheme for the purpose of depriving any tenant or sharecropper of their payment or any other right under the program.</P> <P>(b) The agreement shall be deemed to be in noncompliance if any of the conditions set forth in paragraph (a) of this section occur after the approval of the agreement.</P> </SECTION> <SECTION> <SECTNO>§ 752.13</SECTNO> <SUBJECT>Determination of compliance.</SUBJECT> <P>(a) Determination of the acreage designated under the agreement shall be made in accordance with part 718 of this chapter, as amended.</P> <P>(b) A representative of the county or State committee or any authorized representative of the Secretary shall have the right at any reasonable time to enter a farm concerning which representations have been made on any forms filed under the program in order to measure the designated acreage, to examine any records pertaining thereto, and to otherwise determine the accuracy of any representations and the performance of any obligations by the signatories of a WBP agreement.</P> </SECTION> <SECTION> <SECTNO>§ 752.14</SECTNO> <SUBJECT>Annual payments.</SUBJECT> <P>(a) Persons on the farm having an interest in the designated acreage shall be eligible for an annual payment.</P> <P>(b) The annual per acre payment rates for wetlands and for adjacent land shall be those rates which are recommended by the county and State committee and approved for each county by the Deputy Administrator. If the wetlands are subject to a drainage easement with the United States Department of the Interior or a state governmental entity, the payment rates for such wetlands will be 80 percent of the approved county rates which are applicable to wetlands in the county. A listing of all approved rates shall be available for inspection at the county FSA office.</P> <P>(c) The payment shall be divided among the owner of the designated acreage and any other person having an interest in such acreage, including tenants and sharecroppers, in the manner agreed upon by them as representing their respective contributions to compliance with the agreement. The county committee shall refuse to approve an agreement if it determines that the proposed division of payment is not fair and equitable. The annual payment and the division of the payment shall be specified in the agreement.</P> </SECTION> <SECTION> <SECTNO>§ 752.15</SECTNO> <SUBJECT>Adjustment of annual rates.</SUBJECT> <P>(a) The county committee shall reexamine the payment rates with respect to each agreement at the beginning of the fifth year of any ten-year initial or renewal period and before the renewal period expires.</P> <P>(b) An adjustment in the payment rates shall be made for any initial or renewal period taking into consideration the current land rental rates and crop values in the area. No adjustment shall be made in a payment rate which will result in a reduction of an annual payment rate from the rate which is specified in the initial agreement.</P> </SECTION> <SECTION> <SECTNO>§ 752.16</SECTNO> <SUBJECT>Refunds or forfeitures for noncompliance.</SUBJECT> <P>(a) Except as otherwise provided in paragraph (b) of this section, no payment shall be made to any person for any year with respect to any agreement for which it is determined that for such year:</P> <P>(1) There has been a failure to maintain the wetland character of the designated acreage and devote the adjacent land to the use specified in the agreement as provided in § 752.7. (a);</P> <P>(2) There has been a failure to comply with the prohibition against draining, burning, filling, or otherwise using the designated acreage in a manner which would destroy the wetland character of the acreage as provided in § 752.7 (b);</P> <P>(3) There has been a failure to comply with the prohibition against using the designated acreage as a dumping area for draining other wetlands as provided in § 752.7 (c);</P> <P>(4) There has been a failure to comply with the prohibition against using the designated acreage as a source of irrigation water or as acreage for a set-aside, land diversion, acreage reduction or other program, or to meet the conserving base acreage requirement for <PRTPAGE P="107"/>any other program as provided in § 752.7 (d);</P> <P>(5) There has been a failure to comply with the prohibition against harvesting a crop from or grazing the designated acreage as provided in § 752.7(e);</P> <P>(6) There has been a failure to comply with the provisions relating to haying the designated acreage during periods of severe drought as provided in § 752.7(f);</P> <P>(7) There has been a failure to comply with the provisions relating to the harvesting of timber products as provided in § 752.7(g); or</P> <P>(8) There has been a failure to comply with the provisions relating to tenants and sharecroppers as provided in § 752.12.</P> <P>(b) The regulations governing the making of payments when there has been a failure to comply fully with the provisions of the program, part 791 of this chapter, are applicable to the WBP.</P> <P>(c) The agreement shall be terminated in any case in which the failure to comply with the provisions of this part requires a refund or forfeiture of the entire annual payment under the agreement for the year and it is determined that the failure to comply is of such a nature as to warrant termination of the agreement. If an agreement is terminated, the persons signing the agreement shall forfeit all rights to further payments under the agreement and shall refund all payments received under the agreement.</P> </SECTION> <SECTION> <SECTNO>§ 752.17</SECTNO> <SUBJECT>Actions defeating purposes of program.</SUBJECT> <P>If the county committee with the concurrence of the State committee, or the State committee, finds that any person has taken any action which tends to defeat the purposes of the program, all or any part of the annual payment which otherwise would be due under the program may be withheld or be required to be refunded.</P> </SECTION> <SECTION> <SECTNO>§ 752.18</SECTNO> <SUBJECT>Filing of false claims.</SUBJECT> <P>The making of a fraudulent representation by a person in the payment documents or otherwise for the purpose of obtaining a payment from the county committee shall render the person liable, in addition to any liability under applicable Federal criminal and civil fraud statutes, for a refund of any payments received by such person as the result of the fraudulent representation.</P> </SECTION> <SECTION> <SECTNO>§ 752.19</SECTNO> <SUBJECT>Depriving others of payments.</SUBJECT> <P>If the State committee finds that any person has employed any scheme or device (including coercion, fraud, or misrepresentation) which deprives any other person of a payment to which such person is otherwise entitled under the program, the State committee may withhold or require a refund of all or any part of the program payment which otherwise would be due to the person who employed such scheme or device.</P> </SECTION> <SECTION> <SECTNO>§ 752.20</SECTNO> <SUBJECT>Modification of an agreement.</SUBJECT> <P>(a) Any reconstitution of farms shall be made in accordance with the regulations governing reconstitution of farms, part 719 of this chapter, as amended.</P> <P>(b) If the farm is reconstituted because of purchase, sale, change of operation, or otherwise, the agreement shall be modified in accordance with instructions issued by the Deputy Administrator with respect to any reconstituted farm which contains all or any part of the original designated acreage. The modified agreement or agreements shall reflect the changes in the number of acres in any reconstituted farm, the designated acreage, interested persons, and division of payments. If persons who were not signatories to the original agreement are required to execute such modified agreement or agreements in accordance with the provisions of § 752.8, but such persons are not willing to become parties to the modified agreement or for any other reason a modified agreement is not executed, the agreement shall be terminated with respect to the designated acreage which is not continued in the program, and all unearned payments shall be forfeited or refunded to FSA. The annual payment for the year in which a reconstitution occurs shall not be considered earned unless the designated acreage is continued in the program and there is a compliance with the agreement for the full agreement year. The persons on the farm prior to the reconstitution who were signatories to the agreement <PRTPAGE P="108"/>shall be jointly and severally responsible for refunding the unearned payments previously made.</P> <P>(c) Except with respect to a farm which is reconstituted, if the ownership or operation of the farm changes in such a manner that the agreement no longer contains the signatures of persons required to sign the agreement in accordance with § 752.8, the agreement shall be modified in accordance with instructions issued by the Deputy Administrator to reflect the new interested persons and new divisions of payments. If such persons are not willing to become parties to the modified agreement or for any other reason a modified agreement is not executed, the agreement shall be terminated and all unearned payments shall be forfeited or refunded. The annual payment for the year in which the change of ownership or operation occurs shall not be considered to have been earned unless the designated acreage is continued in the program and there is compliance with the agreement for the full agreement year. The persons on the farm prior to the change of ownership or operation who were signatories to the agreement shall be jointly and severally responsible for refunding the unearned payments previously made.</P> <P>(d) The Deputy Administrator may authorize other agreement modifications which are determined to be desirable to carry out the purposes of the program or to facilitate its administration.</P> </SECTION> <SECTION> <SECTNO>§ 752.21</SECTNO> <SUBJECT>Termination of agreements.</SUBJECT> <P>The Deputy Administrator may, by mutual agreement with the parties to the agreement, consent to the termination of an agreement where: (a) The operator of the farm is physically handicapped and could not reasonably be expected to comply with the terms and conditions of the agreement; (b) the operator is or was mentally unstable at the time of the signing of the agreement and could not reasonably be expected to comply with the terms and conditions of the agreement; (c) the parties to the agreement are unable to comply with the terms of the agreement as the result of conditions beyond their control; (d) compliance with the terms of the agreement would work a severe hardship on the parties to the agreement; or (e) termination of the agreement would be in the public interest. If an agreement is terminated in accordance with the provisions of this section, the annual payment for the year in which the agreement is terminated shall not be considered to have been earned unless there is compliance with the terms and conditions of the agreement for the entire calendar year.</P> </SECTION> <SECTION> <SECTNO>§ 752.22</SECTNO> <SUBJECT>Transfer of interest in an agreement.</SUBJECT> <P>(a) If a person acquires an interest in the designated acreage during the period covered by an agreement, such person may, with the consent of the other parties to the agreement and with approval of the county committee, become a party to the agreement and share in payments thereunder. A person, by becoming a party to the agreement, shall be jointly and severally responsible with the other signatories to the agreement for compliance with the terms and conditions of the agreement. In addition, such person shall be liable for any payment reductions or refunds which may be required as the result of the failure to comply with the terms and conditions of such agreement after becoming a party to the agreement.</P> <P>(b) If a signatory to an agreement ceases to have an interest in the designated acreage, such person thereby ceases to be a party to the agreement. However, such person will not be relieved of any liability for deductions and refunds for failure to comply with the terms and conditions of the agreement while a party to the agreement.</P> </SECTION> <SECTION> <SECTNO>§ 752.23</SECTNO> <SUBJECT>Successors-in-interest.</SUBJECT> <P>In case of death, incompetency, or disappearance of any person, any payment due shall be paid to the successor as determined in accordance with provisions of the regulations in part 707 of this chapter, as amended.</P> </SECTION> <SECTION> <SECTNO>§ 752.24</SECTNO> <SUBJECT>Agreement not in comformity with regulations.</SUBJECT> <P>If, after an agreement is approved by the county committee, it is discovered <PRTPAGE P="109"/>that such agreement is not in conformity with the regulations as the result of a misunderstanding of the program procedures by a signatory to the agreement, a modification of the agreement may be made by mutual agreement. If persons who are currently eligible to execute the corrected agreement are unwilling to do so, the agreement shall be terminated and all payments paid or payable under the agreement shall be forfeited or refunded, except as may be allowed by the Deputy Administrator in accordance with the provisions of § 752.25.</P> </SECTION> <SECTION> <SECTNO>§ 752.25</SECTNO> <SUBJECT>Performance based upon advice or action of county or State committee.</SUBJECT> <P>The provisions of part 790 of this chapter, as amended, relating to performance based upon action or advice of an authorized representative of the Secretary shall be applicable to this program.</P> </SECTION> <SECTION> <SECTNO>§ 752.26</SECTNO> <SUBJECT>Setoffs and withholdings.</SUBJECT> <P>The regulations issued by the Secretary governing setoffs and withholdings, part 13 of this title, as amended, shall be applicable to this program.</P> </SECTION> <SECTION> <SECTNO>§ 752.27</SECTNO> <SUBJECT>Debt collection.</SUBJECT> <P>Any debts arising under this program are governed with respect to their collection by the Federal Claims Collection Act of 1966 (31 U.S.C. 3701) and the regulations found at chapter II of 4 CFR.</P> </SECTION> <SECTION> <SECTNO>§ 752.28</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>Any person may obtain review of determinations affecting participation in this program in accordance with part 614 of this title.</P> <CITA>[60 FR 67316, Dec. 29, 1995]</CITA> </SECTION> <SECTION> <SECTNO>§ 752.29</SECTNO> <SUBJECT>Payments not subject to claims.</SUBJECT> <P>Any payments due any person shall be determined and allowed without regard to State law and without regard to any claim or lien against any crop, or proceeds thereof, which may be asserted by any creditor, except as provided in § 752.26.</P> </SECTION> <SECTION> <SECTNO>§ 752.30</SECTNO> <SUBJECT>Prohibition against payments.</SUBJECT> <P>The regulations in part 796 of this chapter prohibiting the making of payments to program participants who harvest or knowingly permit to be harvested for illegal use marijuana or other such prohibited drug-producing plants on any part of the lands owned or controlled by them are applicable to this program.</P> </SECTION> <SECTION> <SECTNO>§ 752.31</SECTNO> <SUBJECT>Delegation of authority.</SUBJECT> <P>No delegation herein to a State or county committee shall preclude the Administrator, or his designee, from determining any question arising under the program or from reversing or modifying any determination made by a State or county committee.</P> </SECTION> <SECTION> <SECTNO>§ 752.32</SECTNO> <SUBJECT>Paperwork Reduction Act assigned numbers.</SUBJECT> <P>The Office of Management and Budget has approved the information collection requirements contained in these Regulations (§§ 752.8, 752.10 and 752.13) under the provisions of 44 U.S.C. Chapter 35 and OMB number 0560-0062 has been assigned.</P> </SECTION> </PART> <PART> <EAR>Pt. 755</EAR> <HD SOURCE="HED">PART 755—REGIONAL PROGRAMS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart—Appalachian Land Stabilization and Conservation Program</HD> <SECHD>Sec.</SECHD> <SECTNO>755.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>755.2</SECTNO> <SUBJECT>Purposes and objectives.</SUBJECT> <SECTNO>755.3</SECTNO> <SUBJECT>Geographical applicability.</SUBJECT> <SECTNO>755.4</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>755.5</SECTNO> <SUBJECT>State programs.</SUBJECT> <SECTNO>755.6</SECTNO> <SUBJECT>Cost-share contract.</SUBJECT> <SECTNO>755.7</SECTNO> <SUBJECT>Cost-share payments.</SUBJECT> <SECTNO>755.8</SECTNO> <SUBJECT>Modification of contract.</SUBJECT> <SECTNO>755.9</SECTNO> <SUBJECT>Termination of contracts.</SUBJECT> <SECTNO>755.10</SECTNO> <SUBJECT>Noncompliance.</SUBJECT> <SECTNO>755.11</SECTNO> <SUBJECT>Signatures.</SUBJECT> <SECTNO>755.12</SECTNO> <SUBJECT>Filing of false claims.</SUBJECT> <SECTNO>755.13</SECTNO> <SUBJECT>Delegation of authority.</SUBJECT> <SECTNO>755.14</SECTNO> <SUBJECT>Reporting performance.</SUBJECT> <SECTNO>755.15</SECTNO> <SUBJECT>Handling exceptional cases.</SUBJECT> <SECTNO>755.16</SECTNO> <SUBJECT>Access to farms and to farm records.</SUBJECT> <SECTNO>755.17</SECTNO> <SUBJECT>Preservation of cropland, crop acreage and allotment history.</SUBJECT> <SECTNO>755.18</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>755.19</SECTNO> <SUBJECT>Availability of funds.</SUBJECT> <SECTNO>755.20</SECTNO> <SUBJECT>Rural community development proj-ects.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Sec. 208, 79 Stat. 5, 12; 40 U.S.C. App. 1, 2, 203.</P> </AUTH> <SOURCE> <PRTPAGE P="110"/> <HD SOURCE="HED">Source:</HD> <P>30 FR 8669, July 9, 1965, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart—Appalachian Land Stabilization and Conservation Program</HD> <SECTION> <SECTNO>§ 755.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart the following terms shall have the following meanings:</P> <P>(a) <E T="03">Act</E> means the Appalachian Regional Development Act of 1965.</P> <P>(b) <E T="03">Appalachian Region</E> or <E T="03">the Region</E> means that area of the Eastern United States consisting of the following counties (including any political subdivision located within such area):</P> <EXTRACT> <P>In Alabama, the counties of Bibb, Blount, Calhoun, Chambers, Cherokee, Chilton, Clay, Cleburne, Colbert, Coosa, Cullman, De Kalb, Elmore, Etowah, Fayette, Franklin, Jackson, Jefferson, Lamar, Lauderdale, Lawrence, Limestone, Madison, Marion, Marshall, Morgan, Pickens, Randolph, Saint Clair, Shelby, Talladega, Tallapoosa, Tuscaloosa, Walker, and Winston;</P> <P>In Georgia, the counties of Banks, Barrow, Bartow, Carroll, Catoosa, Chattooga, Cherokee, Dade, Dawson, Douglas, Fannin, Floyd, Forsyth, Franklin, Gilmer, Gordon, Gwinnett, Habersham, Hall, Haralson, Heard, Jackson, Lumpkin, Madison, Murray, Paulding, Pickens, Polk, Rabun, Stephens, Towns, Union, Walker, White, and Whitfield;</P> <P>In Kentucky, the counties of Adair, Bath, Bell, Boyd, Breathitt, Carter, Casey, Clark, Clay, Clinton, Cumberland, Elliott, Estill, Fleming, Floyd, Garrard, Green, Greenup, Harlan, Jackson, Johnson, Knott, Knox, Laurel, Lawrence, Lee, Leslie, Letcher, Lewis, Lincoln, McCreary, Madison, Magoffin, Martin, Menifee, Monroe, Montgomery, Morgan, Owsley, Perry, Pike, Powell, Pulaski, Rockcastle, Rowan, Russell, Wayne, Whitley, and Wolfe;</P> <P>In Maryland, the counties of Allegany, Garrett, and Washington;</P> <P>In Mississippi, the counties of Alcorn, Benton, Chickasaw, Choctaw, Clay, Itawamba, Kemper, Lee, Lowndes, Marshall, Monroe, Noxubee, Oktibbeha, Pontotoc, Prentiss, Tippah, Tishomingo, Union, Webster, and Winston;</P> <P>In New York, the counties of Allegany, Broome, Cattaraugus, Chautauqua, Chemung, Chenango, Cortland, Delaware, Otsego, Schoharie, Schuyler, Steuben, Tioga, and Tompkins;</P> <P>In North Carolina, the counties of Alexander, Alleghany, Ashe, Avery, Buncombe, Burke, Caldwell, Cherokee, Clay, Davie, Forsyth, Graham, Haywood, Henderson, Jackson, McDowell, Macon, Madison, Mitchell, Polk, Rutherford, Stokes, Surry, Swain, Transylvania, Watauga, Wilkes, Yadkin, and Yancey;</P> <P>In Ohio, the counties of Adams, Athens, Belmont, Brown, Carroll, Clermont, Coshocton, Gallia, Guernsey, Harrison, Highland, Hocking, Holmes, Jackson, Jefferson, Lawrence, Meigs, Monroe, Morgan, Muskingum, Noble, Perry, Pike, Ross, Scioto, Tuscarawas, Vinton, and Washington;</P> <P>In Pennsylvania, the counties of Allegheny, Armstrong, Beaver, Bedford, Blair, Bradford, Butler, Cambria, Cameron, Carbon, Centre, Clarion, Clearfield, Clinton, Columbia, Crawford, Elk, Erie, Fayette, Forest, Fulton, Greene, Huntingdon, Indiana, Jefferson, Juniata, Lackawanna, Lawrence, Luzerne, Lycoming, McKean, Mercer, Mifflin, Monroe, Montour, Northumberland, Perry, Pike, Potter, Schuylkill, Snyder, Somerset, Sullivan, Susquehanna, Tioga, Union, Venango, Warren, Washington, Wayne, Westmoreland, and Wyoming;</P> <P>In South Carolina, the counties of Anderson, Cherokee, Greenville, Oconee, Pickens, and Spartanburg;</P> <P>In Tennessee, the counties of Anderson, Bledsoe, Blount, Bradley, Campbell, Cannon, Carter, Claiborne, Clay, Cocke, Coffee, Cumberland, DeKalb, Fentress, Franklin, Grainger, Greene, Grundy, Hamblen, Hamilton, Hancock, Hawkins, Jackson, Jefferson, Johnson, Knox, Loudon, McMinn, Macon, Marion, Meigs, Monroe, Morgan, Overton, Pickett, Polk, Putnam, Rhea, Roane, Scott, Sequatchie, Sevier, Smith, Sullivan, Unicoi, Union, Van Buren, Warren, Washington, and White;</P> <P>In Virginia, the counties of Alleghany, Bath, Bland, Botetourt, Buchanan, Carroll, Craig, Dickenson, Floyd, Giles, Grayson, Highland, Lee, Pulaski, Russell, Scott, Smyth, Tazewell, Washington, Wise, and Wythe;</P> <P>All the counties of West Virginia.</P> </EXTRACT> <P>(c) <E T="03">Secretary</E> means the Secretary of Agriculture of the United States or any officer or employee of the United States Department of Agriculture to whom authority has been delegated, or to whom authority may hereafter be delegated, to act in his stead.</P> <P>(d) <E T="03">Administrator</E> means the Administrator or Acting Administrator of the Farm Service Agency, United States Department of Agriculture.</P> <P>(e) <E T="03">Deputy Administrator</E> means the Deputy Administrator or Acting Deputy Administrator for State and County Operations, Farm Service Agency, United States Department of Agriculture.<PRTPAGE P="111"/> </P> <P>(f) <E T="03">Director</E> means the Director or Acting Director of the Farmer Programs Division, Farm Service Agency, United States Department of Agriculture.</P> <P>(g) <E T="03">State</E> means any one of the States in the Appalachian Region.</P> <P>(h) <E T="03">State committee</E> means the persons in a State designated by the Secretary as the Agricultural Stabilization and Conservation State Committee under section 8(b) of the Soil Conservation and Domestic Allotment Act, as amended.</P> <P>(i) <E T="03">County</E> means a political subdivision of a State identified as a county.</P> <P>(j) <E T="03">County committee</E> means the persons elected within a county as the county committee pursuant to regulations governing the selection and functions of Agricultural Stabilization and Conservation county and community committees under section 8(b) of the Soil Conservation and Domestic Allotment Act, as amended.</P> <P>(k) <E T="03">Operator</E> means the person who is in charge of the supervision and conduct of the farming operations on the entire farm.</P> <P>(l) <E T="03">Occupier</E> means any person other than the owner or operator who has an interest as tenant or sharecropper in the acreage covered by the contract.</P> <P>(m) <E T="03">Farm</E> means that area of land defined as a farm under the regulations governing Reconstitution of Farms, Allotments, and Bases, part 719 of this chapter, as amended, or, for purposes of contracts entered into pursuant to § 755.20, the land covered by the contract.</P> <P>(n) <E T="03">Cropland</E> means that land considered as cropland under the regulations governing Reconstitution of Farms, Allotments, and Bases, part 719 of this chapter, as amended.</P> <P>(o) <E T="03">Contract</E> means a Cost-Share Contract, Appalachian Land Stabilization and Conservation Program.</P> <P>(p) <E T="03">Commission</E> means the Appalachian Regional Commission which is composed of one Federal member (Federal Cochairman) and one member from each participating State in the Appalachian region.</P> <P>(q) <E T="03">Federal Cochairman</E> means the Federal Cochairman of the Appalachian Regional Commission.</P> <P>(r) <E T="03">State Cochairman</E> means the State Cochairman of the Appalachian Regional Commission as elected by the State members of the Commission from among their number.</P> <CITA>[30 FR 8669, July 9, 1965, as amended by Amdt. 2, 30 FR 14099, Nov. 9, 1965; Amdt. 4, 33 FR 16141, Nov. 5, 1968; Amdt. 5, 35 FR 8442, May 29, 1970]</CITA> </SECTION> <SECTION> <SECTNO>§ 755.2</SECTNO> <SUBJECT>Purposes and objectives.</SUBJECT> <P>The general purposes and objectives of the Appalachian Land Stabilization and Conservation Program are to promote economic growth of the Region and to promote the conservation and development of the Region's soil and water resources. This program is a long-term program designed to carry out the policy of the Act by assisting landowners, operators, or occupiers through contracts providing for land stabilization, erosion and sediment control, reclamation through changes in land use, and the establishment of practices and measures for the conservation and development of the Region's soil, water, woodland, wildlife, and recreation resources.</P> </SECTION> <SECTION> <SECTNO>§ 755.3</SECTNO> <SUBJECT>Geographical applicability.</SUBJECT> <P>The Appalachian Land Stabilization and Conservation Program will be limited to the States and counties designated as part of the Appalachian Region as defined in § 755.1 of the regulations of this part, and then only in counties or areas specifically approved in the State program developed hereunder.</P> </SECTION> <SECTION> <SECTNO>§ 755.4</SECTNO> <SUBJECT>General.</SUBJECT> <P>(a) The Appalachian Land Stabilization and Conservation Program will be administered in the field by State and county committees under the general direction and supervision of the Administrator. Members of county committees are hereby authorized to sign contracts on behalf of the Secretary. State and county committees do not have authority to modify or waive any of the provisions of these regulations, or any amendment, supplement, or revision thereto.</P> <P>(b) Landowners, operators, and occupiers desiring to share in the accomplishment of the purposes and objectives of the program will be given an <PRTPAGE P="112"/>opportunity to participate in the program in accordance with the provisions of the program as set forth in this subpart. An applicant, as a part of his application for assistance, will file an acceptable conservation and development plan for the acreage to be included in his contract, and the measures specified in the plan must be carried out irrespective of whether cost-sharing is offered. The county committee will determine the practices and extent of such practices to be approved for cost-sharing to assist the applicant in carrying out his acceptable plan. A contract shall be entered into setting forth the extent of the approved assistance. An acceptable conservation and development plan will be a plan developed for the land proposed to be placed under contract, on a form prescribed by the Administrator, with technical planning assistance by technicians of the Soil Conservation Service, except in cases where the proposed treatment involves only a single practice of pasture renovation or timber stand improvement or conversion of less than 10 acres of land to grass or trees and such use does not involve critical areas or unusual costs and the conservation and development plan is acceptable to the county committee. In approving contracts, the county committees shall give preference to needy landowners, operators, and occupiers to the extent that such preference is consistent with the development of land treatment programs in the project area.</P> <P>(c) Detailed information concerning the program as it applies to an individual farm may be obtained from the county FSA office for the county in which the farm is located or from the State FSA office.</P> <CITA>[30 FR 8669, July 9, 1965, as amended by Amdt. 4, 33 FR 16141, Nov. 5, 1968]</CITA> </SECTION> <SECTION> <SECTNO>§ 755.5</SECTNO> <SUBJECT>State programs.</SUBJECT> <P>(a) The State program shall be developed by the State or a political subdivision thereof in accordance with the regulations contained in this subpart. The Farm Service Agency and other applicable agencies of the Department of Agriculture shall cooperate with the State governmental officials in the development of the program. The chairman of the State committee as the chairman of the State Agricultural Conservation Program Development Group shall be the point of contact with the State governmental officials. The State Agricultural Conservation Program Development Group, which consists of the State ASC Committee (including the State Director of Extension), the State conservationist of the Soil Conservation Service, and the Forest Service official having jurisdiction over farm forestry in the State, shall consult with organizations and agencies within the State that have conservation interests and responsibilities. Upon request of the Governor of the State, a person selected as a direct representative of the Governor may be designated by the Secretary as an additional member of the ACP Development Group with equal authority with other members of the Group in the development of the State program.</P> <P>(b) The State program shall include the following provisions: (1) Identification of program objectives and areas in the State where the program will be applicable; (2) the designation of practices for which cost-share assistance is requested for each designated area, including specifications for each proposed practice; and (3) the proposed cost-share rates for each practice.</P> <P>(c) Minimum specifications which practices must meet to be eligible for Federal cost-sharing shall be set forth in the State program, or be incorporated therein by specific reference to a standard publication or other written document containing such specifications. For practices involving the establishment or improvement of vegetative cover, the specifications shall include, where appropriate, liming fertilization, and seeding rates, eligible seeds and mixtures, seeding dates, requirements for cultural operations and inoculation, and other steps essential to the successful establishment or improvement of the vegetative cover. For mechanical or construction type practices, the specifications shall include, where appropriate, the types and sizes of material, installation or construction requirements, and other steps essential to the proper functioning of the structure. For other practices, the specifications shall include those steps essential to the successful performance <PRTPAGE P="113"/>of the practice. Practice specifications may provide minimum performance requirements which will qualify the practice for cost-sharing and maximum limits of performance which will be eligible for cost-sharing. For practices which authorize Federal cost-sharing for applications of liming materials and commercial fertilizers, the minimum applications and maximum applications on which cost-sharing is authorized shall be determined on the basis of a current soil test: <E T="03">Provided, however,</E> That if available facilities are not adequate to permit the desired use of soil tests under the program, an alternative basis for determination by the county committee of such application shall be authorized to the extent necessary.</P> <P>(d) The following practices and uses are authorized:</P> <P>(1) Establishment of permanent sod waterways to dispose of excess water without causing erosion.</P> <P>(2) Establishment of a permanent vegetative cover for soil protection or as a needed land use adjustment.</P> <P>(3) Constructing terraces to detain or control the flow of water and check soil erosion.</P> <P>(4) Constructing diversion terraces, ditches, or dikes to intercept runoff and divert excess water to protected outlets.</P> <P>(5) Constructing erosion control, detention, or sediment retention dams, pits, or ponds to prevent or heal gullying or to retard or reduce runoff of water.</P> <P>(6) Constructing channel lining, chutes, drop spillways, pipe drops, drop inlets, or similar structures for the protection of outlets and water channels that dispose of excess water.</P> <P>(7) Streambank or shore protection, channel clearance, enlargement or realinement, or construction of floodways, levees, or dikes, to prevent erosion or flood damage to farmland.</P> <P>(8) Establishment of a stand of trees or shrubs to prevent erosion.</P> <P>(9) Establishment of a stand of forest trees or shrubs on farmland for purposes other than the prevention of erosion.</P> <P>(10) Improvement of a stand of forest trees.</P> <P>(11) Establishment of contour strip-cropping to protect soil from erosion.</P> <P>(12) Constructing or sealing dams, pits, or ponds as a means of protecting vegetative cover or to make practicable the utilization of the land for vegetative cover.</P> <P>(13) Developing springs or seeps for livestock water as a means of protecting vegetative cover or to make practicable the utilization of the land for vegetative cover.</P> <P>(14) Controlling competitive shrubs to permit growth of adequate desirable vegetative cover.</P> <P>(15) Improvement of an established vegetative cover for soil or watershed protection.</P> <P>(16) Treatment of farmland to permit the use of legumes and grasses for soil improvement and protection.</P> <P>(17) Construction of water facilities for wildlife habitat or protection.</P> <P>(18) Establishment of vegetative cover to provide habitat, food, or shelter for wildlife.</P> <P>(19) Conservation practices to develop recreation resources—establishment of picnic and sports area; establishment of camping and nature recreation areas; establishment of hunting and shooting preserve area; establishment of fishing area; establishment of summer water sports area; establishment of winter sports area.</P> <P>(20) Other practices not covered above which are determined to be needed to accomplish the purpose of the program.</P> <P>(e) The Soil Conservation Service shall have the same technical responsibility for Appalachian Land Stabilization and Conservation Program practices as it has for the same or similar Agricultural Conservation Program Practices including applicable components of approved recreation practices. The Forest Service is responsible for the technical phases of forestry practices.</P> <P>(f) Each proposed State program shall be submitted to the Commission by the member thereof representing such State. The estimated amount of funds needed to accomplish the objectives of such program shall be stated in the submission of the proposed program to the Commission. If approved by the Commission, the proposed State <PRTPAGE P="114"/>program shall be submitted to the Secretary by the Federal Cochairman. Responsibility is assigned to the Farmer Programs Division, FSA for review and recommendation for approval or disapproval by the Secretary.</P> <P>(g) Copies of bulletins setting forth the State program as approved by the Secretary shall be available in the office of the county committee.</P> <CITA>[30 FR 8669, July 9, 1965, as amended by Amdt. 2, 30 FR 14099, Nov. 9, 1965]</CITA> </SECTION> <SECTION> <SECTNO>§ 755.6</SECTNO> <SUBJECT>Cost-share contract.</SUBJECT> <P>(a) <E T="03">Filing requests.</E> (1) Landowners, operators, or occupiers in eligible counties shall be furnished information with respect to the program and afforded an opportunity to request a cost-share contract covering those practices which would accomplish the objectives of the program on the farm.</P> <P>(2) The request shall be on a form and in accordance with instructions prescribed by the Administrator.</P> <P>(b) <E T="03">Entering into a contract.</E> (1) The county committee is authorized to approve the contract on behalf of the Secretary.</P> <P>(2) The contract must be signed by the owner of the land on which cost-share payments are provided under the contract and by the operator of the farm. The contract shall also be signed by any occupiers who will share in payments in one or more years of the contract period.</P> <P>(3) There shall be only one contract for a farm.</P> <P>(4) The final date for signing the contract shall be the date announced by the Administrator.</P> <P>(c) <E T="03">Contract period.</E> (1) The period to be covered by a contract shall be not less than 3 years or longer than 10 years as agreed to by the contract signers and the county committee.</P> <P>(2) The first year of the contract period shall begin on the date of the approval of the contract and shall end on December 31 of such year. Each subsequent year of the contract period shall be on a calendar year basis.</P> </SECTION> <SECTION> <SECTNO>§ 755.7</SECTNO> <SUBJECT>Cost-share payments.</SUBJECT> <P>(a) Subject to the conditions and limitations in this subpart, cost-sharing may be authorized for practices needed during the period of the contract to conserve and develop soil, water, woodland, wildlife, and recreation resources. Payment of the cost-shares shall be made only upon application submitted on a form prescribed by the Administrator. Practices required to be established under the contract which are started after a request for a contract is filed shall be considered as started during the contract period.</P> <P>(b) Cost-share rates shall not exceed 80 per centum of the average cost of carrying out the land treatment measures or such lower rate as the county committee determines will accomplish the objectives of the program. As a further limitation, cost-sharing may not be authorized in excess of a total amount computed by multiplying the number of acres designated under contract times $50, unless a representative of the State committee approves an amount in excess of this limitation on the basis that the income potential and benefits derived from expenditures of the additional money warrant the higher limit.</P> <P>(c) Cost-sharing shall not be approved for more than 50 acres per farm.</P> <P>(d) The total acreage with respect to which any landowner, operator, or occupier receives cost-sharing payments shall not exceed 50 acres under all contracts in which he has an interest.</P> <P>(e) Cost-sharing for the practices or components thereof contained in the approved State program is conditioned upon the establishment, maintenance, and performance of the practices in accordance with all applicable specifications and program provisions. The county committee shall specify on the practice approval the date by which the practice must be completed. Subject to the availability of funds, cost-sharing may be authorized for the restoration or replacement of any needed conservation measure if during the contract period the original conservation use is destroyed or rendered unsuitable through no fault of the contract signers.</P> <P>(f) In addition to the provisions contained in this subpart, cost-sharing payments shall also be subject to the following regulations of the Agricultural Conservation Program (7 CFR 701.1-701.93, as amended):</P> <EXTRACT> <PRTPAGE P="115"/> <FP SOURCE="FP-1">Section 701.24 <E T="03">Failure to meet minimum requirements,</E> </FP> <FP SOURCE="FP-1">Section 701.25 <E T="03">Conservation materials and services,</E> </FP> <FP SOURCE="FP-1">Section 701.26 <E T="03">Practices carried out with aid for ineligible persons,</E> </FP> <FP SOURCE="FP-1">Section 701.27 <E T="03">Division of Federal cost-share,</E> </FP> <FP SOURCE="FP-1">Section 701.33 <E T="03">Compliance with regulatory measures,</E> </FP> <FP SOURCE="FP-1">Section 701.36 <E T="03">Depriving others of Federal cost-sharing,</E> </FP> <FP SOURCE="FP-1">Section 701.38 <E T="03">Misuse of purchase orders,</E> </FP> <FP SOURCE="FP-1">Section 701.39 <E T="03">Federal cost-shares not subject to claims,</E> and</FP> <FP SOURCE="FP-1">Section 701.40 <E T="03">Assignments.</E> </FP> </EXTRACT> <FP>The Agricultural Conservation Program regulations referred to above shall mean the Agricultural Conservation Program regulations applicable to the year in which the contract is approved.</FP> <P>(g) Cost-share payments shall not be made under the program with respect to land owned by the Federal Government, a State, or a political subdivision thereof.</P> <CITA>[30 FR 8669, July 9, 1965, as amended by Amdt. 1, 30 FR 9758, Aug. 5, 1965; Amdt. 4, 33 FR 16141, Nov. 5, 1968]</CITA> </SECTION> <SECTION> <SECTNO>§ 755.8</SECTNO> <SUBJECT>Modification of contract.</SUBJECT> <P>(a) If the farm is reconstituted in accordance with the regulations governing Reconstitution of Farms, Allotments, and Bases, part 719 of this chapter, as amended, or if there is any change in the land covered by a contract entered into pursuant to § 755.20, because of purchase, sale, change of operation, or otherwise, the contract shall be modified. Such modified contract or contracts shall reflect the changes in the number of acres in any resulting farm, the acreage covered by the contract, interested persons, and practices called for under the original contract. If persons who were not signatories to the original contract are eligible and required to sign such modified contract or contracts but are not willing to become parties to the modified contract or for any other reason a modified contract is not entered into, cost-share payments for practices which have not been carried out shall be forfeited with respect to acreage not continued in the program. In addition, with respect to acreage not continued in the program, cost-share payments paid for practices (or components thereof) which have been carried out shall be refunded by the owner of such acreage prior to reconstitution unless the county committee with the approval of the State committee determines that the failure to carry out all of the practices called for by the original contract will not impair the practices which have been carried out and the completed practices will provide conservation benefits consistent with the cost-shares which have been paid. Notwithstanding the foregoing, if control of land was lost through eminent domain proceedings or to an agency having the right of eminent domain, any cost-share payments paid under the contract with respect to such land are not required to be refunded.</P> <P>(b) Except in cases covered by paragraph (a) of this section, if the ownership or operation of the farm or the land covered by the contract changes in such a manner that the contract no longer contains the signatures of persons required to sign the contract as provided in § 755.6, the contract shall be modified to reflect the new interested persons. If such persons are not willing to become parties to the modified contract, or for any other reason a modified contract is not entered into, cost-share payments shall be forfeited and refunded in accordance with the rules in paragraph (a) of this section.</P> <P>(c) Upon request of the contract signers and approval of the county committee, a contract may be modified to change or add practices, or to make other changes which are consistent with this subpart, the State program, and the conservation and development plan.</P> <P>(d) Upon request of the contract signers, a contract which would otherwise be in a noncompliance status at the end of the contract period under the provisions of § 755.10(a) of these regulations may be modified to extend the contract period not to exceed a total period of 10 years if the county committee determines that failure to establish the practices specified in the contract was not the result of the fault or negligence of the contract signers.</P> <CITA>[30 FR 8669, July 9, 1965, as amended by Amdt. 5, 35 FR 8442, May 29, 1970]</CITA> </SECTION> <SECTION> <PRTPAGE P="116"/> <SECTNO>§ 755.9</SECTNO> <SUBJECT>Termination of contracts.</SUBJECT> <P>The Deputy Administrator may consent to the termination of a contract in cases where the parties to the contract are unable to comply with the terms of the contract due to conditions beyond their control, in cases where compliance with the terms of the contract would work a severe hardship on the parties to the contract, or in cases where termination of the contract would be in the public interest, provided the parties to the contract refund such part of the cost-share payments made under the contract as the Deputy Administrator determines appropriate.</P> </SECTION> <SECTION> <SECTNO>§ 755.10</SECTNO> <SUBJECT>Noncompliance.</SUBJECT> <P>(a) Failure to establish the practices specified in the contract within the time specified by the county committee shall be a violation of the contract and all payments under the contract shall be forfeited and refunded.</P> <P>(b) Failure to maintain a practice for the contract period or the normal lifespan of the practice, whichever is shorter, in accordance with good farming practices shall be a violation of the contract and any payment made in connection with such practice shall be refunded unless the practice is restored within the time prescribed by the county committee. The normal -lifespan of a practice shall be determined by the county committee.</P> <P>(c) If the county committee finds that any person has adopted or participated in any practice which tends to defeat the purposes of the program, it may withhold, or require to be refunded, all or any part of cost-share payments paid or payable under the program. It shall be considered a practice defeating the purposes of the program if the contract signers do not make available for public use a recreation resource development for which costs are shared. The regulations governing nondiscrimination in federally assisted programs of the Department of Agriculture, part 15 of this title, shall be applicable to this program.</P> <CITA>[30 FR 8669, July 9, 1965, as amended by Amdt. 3, 32 FR 12938, Sept. 12, 1967]</CITA> </SECTION> <SECTION> <SECTNO>§ 755.11</SECTNO> <SUBJECT>Signatures.</SUBJECT> <P>Signatures to contracts and related forms shall be in conformity with the instructions on signatures and authorizations applicable to the Agricultural Conservation Program.</P> </SECTION> <SECTION> <SECTNO>§ 755.12</SECTNO> <SUBJECT>Filing of false claims.</SUBJECT> <P>The making of a fraudulent representation by a person in the payment documents or otherwise for the purpose of obtaining a payment from the county committee shall render the person liable, aside from any additional liability under criminal and civil frauds statutes, for a refund of the payments received by him with respect to which the fraudulent representation was made.</P> </SECTION> <SECTION> <SECTNO>§ 755.13</SECTNO> <SUBJECT>Delegation of authority.</SUBJECT> <P>No delegation in this subpart to a State or county committee shall preclude the Administrator, or his designee, from determining any question arising under the program or reversing or modifying any determinations made by a State or county committee.</P> </SECTION> <SECTION> <SECTNO>§ 755.14</SECTNO> <SUBJECT>Reporting performance.</SUBJECT> <P>The Operator of the farm, in accordance with instructions issued by the Deputy Administrator, shall report to the county committee on Form ACP-245 the extent of compliance with the terms of the contract.</P> </SECTION> <SECTION> <SECTNO>§ 755.15</SECTNO> <SUBJECT>Handling exceptional cases.</SUBJECT> <P>The Deputy Administrator may allow payment for performance not meeting all program requirements, where not prohibited by statute, if in his judgment such action is needed to permit a proper disposition of the case. Such action may be taken only where the person acted in good faith and in reasonable reliance on any instruction or commitment of any member, or employee of the State or county committee or representatives of other Federal agencies assigned responsibility under the program, in meeting his obligations under the contract and in so doing reasonably accomplished the purposes of the contract. The amount of the payment shall be based on the actual performance and shall not exceed the amount to which the person <PRTPAGE P="117"/>would have been entitled if the performance rendered had met all requirements.</P> </SECTION> <SECTION> <SECTNO>§ 755.16</SECTNO> <SUBJECT>Access to farms and to farm rec-ords.</SUBJECT> <P>County committeemen or their authorized representatives, or any authorized representative of the Secretary of Agriculture, shall have such access to farms and to records pertaining thereto as is necessary to make acreage determinations and to determine the extent of compliance with the terms of the contract.</P> </SECTION> <SECTION> <SECTNO>§ 755.17</SECTNO> <SUBJECT>Preservation of cropland, crop acreage and allotment history.</SUBJECT> <P>The cropland, crop acreage, and allotment history applicable to the designated acreage shall be preserved, for any Federal program under which such history is used as a basis for an allotment or other limitation on the production of such crop, for the period covered by the contract and an equal period thereafter so long as the approved practice is maintained on the land.</P> </SECTION> <SECTION> <SECTNO>§ 755.18</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>Any person may obtain reconsideration and review of determinations made under this subpart in accordance with the Appeal Regulations, part 780 of this chapter (29 FR 8200), as amended.</P> </SECTION> <SECTION> <SECTNO>§ 755.19</SECTNO> <SUBJECT>Availability of funds.</SUBJECT> <P>The provisions of this program are necessarily subject to such legislation as the Congress of the United States may hereafter enact; the payments provided for in this subpart are contingent upon such appropriations as the Congress has or may hereafter provide for such purpose, and the amount of such payments must necessarily be within the limits finally determined by such appropriations.</P> </SECTION> <SECTION> <SECTNO>§ 755.20</SECTNO> <SUBJECT>Rural community development projects.</SUBJECT> <P>(a) Notwithstanding any other provision of this subpart, the county committee, in accordance with instructions issued by the Deputy Administrator, may enter into a contract with a State, county, city, town, or subdivision thereof, or a group acting for such a body, which owns, operates, or occupies land in the Appalachian Region. The contracts approved under this section shall be for projects which promote rural community development and conservation of the soil and water resources of the region.</P> <P>(b) Cost-sharing approved under this section shall not exceed 80 per centum of the cost of carrying out the approved land uses and conservation treatment on 50 acres of land occupied by such owner, operator, or occupier.</P> <CITA>[35 FR 8442, May 29, 1970]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 760</EAR> <HD SOURCE="HED">PART 760—INDEMNITY PAYMENT PROGRAMS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart—Dairy Indemnity Payment Program</HD> <SUBJGRP> <HD SOURCE="HED">Program Operations</HD> <SECHD>Sec.</SECHD> <SECTNO>760.1</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>760.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Payments to Dairy Farmers for Milk</HD> <SECTNO>760.3</SECTNO> <SUBJECT>Indemnity payments on milk.</SUBJECT> <SECTNO>760.4</SECTNO> <SUBJECT>Normal marketings of milk.</SUBJECT> <SECTNO>760.5</SECTNO> <SUBJECT>Fair market value of milk.</SUBJECT> <SECTNO>760.6</SECTNO> <SUBJECT>Information to be furnished.</SUBJECT> <SECTNO>760.7</SECTNO> <SUBJECT>Other requirements for affected farmers.</SUBJECT> <SECTNO>760.8</SECTNO> <SUBJECT>Application for payments for milk.</SUBJECT> <SECTNO>760.9</SECTNO> <SUBJECT>Other legal recourse.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Payments to Manufacturers Affected by Pesticides</HD> <SECTNO>760.20</SECTNO> <SUBJECT>Payments to manufacturers of dairy products.</SUBJECT> <SECTNO>760.21</SECTNO> <SUBJECT>Application for payments by manufacturers.</SUBJECT> <SECTNO>760.22</SECTNO> <SUBJECT>Information to be furnished by manufacturer.</SUBJECT> <SECTNO>760.23</SECTNO> <SUBJECT>Other requirements for manufacturers.</SUBJECT> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">General Provisions</HD> <SECTNO>760.24</SECTNO> <SUBJECT>Limitation of authority.</SUBJECT> <SECTNO>760.25</SECTNO> <SUBJECT>Estates and trusts; minors.</SUBJECT> <SECTNO>760.26</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>760.27</SECTNO> <SUBJECT>Setoffs.</SUBJECT> <SECTNO>760.28</SECTNO> <SUBJECT>Overdisbursement.</SUBJECT> <SECTNO>760.29</SECTNO> <SUBJECT>Death, incompetency, or disappearance.</SUBJECT> <SECTNO>760.30</SECTNO> <SUBJECT>Records and inspection thereof.</SUBJECT> <SECTNO>760.31</SECTNO> <SUBJECT>Assignment.</SUBJECT> <SECTNO>760.32</SECTNO> <SUBJECT>Instructions and forms.</SUBJECT> <SECTNO>760.33</SECTNO> <SUBJECT>Availability of funds.</SUBJECT> <SECTNO>760.34</SECTNO> <SUBJECT>Paperwork Reduction Act assigned numbers.</SUBJECT> </SUBJGRP> </SUBPART> <SUBPART> <PRTPAGE P="118"/> <RESERVED>Subpart—Beekeeper Indemnity Payment Program (1978-80) [Reserved]</RESERVED> </SUBPART> </CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart—Dairy Indemnity Payment Program</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 106-387, 114 Stat. 1549, and Pub. L. 107-76, 115 Stat. 704.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>43 FR 10535, Mar. 14, 1978, unless otherwise noted.</P> </SOURCE> <SUBJGRP> <HD SOURCE="HED">Program Operations</HD> <SECTION> <SECTNO>§ 760.1</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>This indemnity payment program will be carried out by FSA under the direction and supervision of the Deputy Administrator. In the field, the program will be administered by the State and county committees.</P> </SECTION> <SECTION> <SECTNO>§ 760.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For purposes of this subject, the following terms shall have the meanings specified:</P> <P>(a) <E T="03">Secretary</E> means the Secretary of Agriculture of the United States or any officer or employee of the U.S. Department of Agriculture to whom he has delegated, or to whom he may hereafter delegate, authority to act in his stead.</P> <P>(b) <E T="03">FSA</E> means the Farm Service Agency, U.S. Department of Agriculture.</P> <P>(c) <E T="03">Deputy Administrator</E> means the Deputy Administrator, State and County Operations, FSA.</P> <P>(d) <E T="03">State committee</E> means the Agricultural Stabilization and Conservation State committee.</P> <P>(e) <E T="03">County committee</E> means the Agricultural Stabilization and Conservation county committee.</P> <P>(f) <E T="03">Pesticide</E> means an economic poison which was registered pursuant to the provisions of the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. 135 through 135k), and approved for use by the Federal Government.</P> <P>(g) <E T="03">Chemicals or Toxic Substances</E> means any chemical substance or mixture as defined in the Toxic Substances Control Act (15 U.S.C. 2602).</P> <P>(h) <E T="03">Nuclear Radiation or Fallout</E> means contamination from nuclear radiation or fallout from any source.</P> <P>(i) <E T="03">Violating Substance</E> means one or more of the items defined in paragraphs (f), (g), and (h) of this section.</P> <P>(j) <E T="03">Public agency</E> means any Federal, State or local public regulatory agency.</P> <P>(k) <E T="03">Affected farmer</E> means a person who produces whole milk which is removed from the commerical market any time from:</P> <P>(1) Pursuant to the direction of a public agency because of the detection of pesticide residues in such whole milk by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency, or</P> <P>(2) Pursuant to the direction of a public agency because of the detection of other residues of chemicals or toxic substances residues, or contamination from nuclear radiation or fallout in such whole milk by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency.</P> <P>(l) <E T="03">Affected manufacturer</E> means a person who manufactures dairy products which are removed from the commercial market pursuant to the direction of a public agency because of the detection of pesticide residue in such dairy products by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency.</P> <P>(m) <E T="03">Milk handler</E> means the marketing agency to or through which the affected dairy farmer marketed his whole milk at the time he was directed by the public agency to remove his whole milk from the commercial market.</P> <P>(n) <E T="03">Person</E> means an individual, partnership, association, corporation, trust, estate, or other legal entity.</P> <P>(o) <E T="03">Application period</E> means any period during which an affected farmer's whole milk is removed from the commercial market pursuant to direction of a public agency for a reason specified in paragraph (k) of this section and for which application for payment is made.</P> <P>(p) <E T="03">Pay period</E> means (1) in the case of an affected farmer who markets his whole milk through a milk handler, the period used by the milk handler in settling with the affected farmer for <PRTPAGE P="119"/>his whole milk, usually biweekly or monthly, or (2) in the case of an affected farmer whose commercial market consists of direct retail sales to consumers, a calendar month.</P> <P>(q) <E T="03">Whole milk</E> means milk as it is produced by cows.</P> <P>(r) <E T="03">Commercial market</E> means (1) the market to which the affected farmer normally delivers his whole milk and from which it was removed because of detection therein of a residue of a violating substance(s) or (2) the market to which the affected manufacturer normally delivers his dairy products and from which they were removed because of detection therein of pesticide residue.</P> <P>(s) <E T="03">Removed from the commercial market</E> means (1) produced and destroyed or fed to livestock, (2) produced and delivered to a handler who destroyed it or disposed of it as salvage (such as separating whole milk, destroying the fat, and drying the skim milk), or (3) produced and otherwise diverted to other than the commercial market.</P> <P>(t) <E T="03">Payment subject to refund</E> means a payment which is made by a milk handler to an affected farmer, and which such farmer is obligated to refund to the milk handler.</P> <P>(u) <E T="03">Base period</E> means the calendar month or 4-week period immediately preceding removal of milk from the market.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 22, 1979; 52 FR 17935, May 13, 1987; 53 FR 44001, Nov. 1, 1988; 56 FR 1358, Jan. 14, 1991; 61 FR 18485, Apr. 26, 1996]</CITA> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Payments to Dairy Farmers for Milk</HD> <SECTION> <SECTNO>§ 760.3</SECTNO> <SUBJECT>Indemnity payments on milk.</SUBJECT> <P>An indemnity payment for milk may be made to an affected farmer who is determined by the county committee to be in compliance with all the terms and conditions of this subpart in the amount of the fair market value of his normal marketings for the application period, as determined in accordance with §§ 760.4 and 760.5, less (a) any amount he received for whole milk marketed during the applications period, and (b) any payment not subject to refund which he received from a milk handler with respect to whole milk removed from the commercial market during the application period.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.4</SECTNO> <SUBJECT>Normal marketings of milk.</SUBJECT> <P>(a) The county committee shall determine the affected farmer's normal marketings which, for the purposes of this subpart, shall be the sum of the quantities of whole milk which such farmer would have sold in the commercial market in each of the pay periods in the application period but for the removal of his whole milk from the commercial market because of the detection of a residue of a violating substance.</P> <P>(b) Normal marketings for each pay period are based on the average daily production during the base period.</P> <P>(c) Normal marketings determined in paragraph (b) of this section are adjusted for any change in the daily average number of cows milked during each pay period the milk is off the market compared with the average number of cows milked daily during the base period.</P> <P>(d) If only a portion of a pay period falls within the application period, normal marketings for such pay period shall be reduced so that they represent only that part of such pay period which is within the application period.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 22, 1979]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.5</SECTNO> <SUBJECT>Fair market value of milk.</SUBJECT> <P>(a) The county committee shall determine the fair market value of the affected farmer's normal marketings, which, for the purposes of this subpart, shall be the sum of the net proceeds such farmer would have received for his normal marketings in each of the pay periods in the application period.</P> <P>(b) The county committee shall determine the net proceeds the affected farmer would have received in each of the pay periods in the application period (1) in the case of an affected farmer who markets his whole milk through a milk handler, by multiplying the affected farmer's normal marketings for each such pay period by the average net price per hundred-weight of whole milk paid during the pay period by <PRTPAGE P="120"/>such farmer's milk handler in the same area for whole milk similar in quality and butterfat test to that marketed by the affected farmer in the base period used to determine his normal marketings, or (2) in the case of an affected farmer whose commercial market consists of direct retail sales to consumers, by multiplying the affected farmer's normal marketings for each such pay period by the average net price per hundredweight of whole milk, as determined by the county committee, which other producers in the same area who marketed their whole milk through milk handlers received for whole milk similar in quality and butterfat test to that marketed by the affected farmer during the base period used to determine his normal marketings.</P> <P>(c) In determining the net price for whole milk, the county committee shall deduct from the gross price therefor any transportation, administrative, and other costs of marketing which it determines are normally incurred by the affected farmer but which were not incurred because of the removal of his whole milk from the commercial market.</P> </SECTION> <SECTION> <SECTNO>§ 760.6</SECTNO> <SUBJECT>Information to be furnished.</SUBJECT> <P>The affected farmer shall furnish to the county committee complete and accurate information sufficient to enable the county committee or the Deputy Administrator to make the determinations required in this subpart. Such information shall include, but is not limited to:</P> <P>(a) A copy of the notice from, or other evidence of action by, the public agency which resulted in the removal of the affected farmer's whole milk from the commercial market.</P> <P>(b) The specific name of the violating substance causing the removal of his whole milk from the commercial market, if not included in the notice or other evidence of action furnished under paragraph (a) of this section.</P> <P>(c) The quantity and butterfat test of whole milk produced and marketed during the base period. This information must be a certified statement from the affected farmer's milk handler or any other evidence the county committee accepts as an accurate record of milk production and butterfat tests during the base period.</P> <P>(d) The average number of cows milked during the base period and during each pay period in the application.</P> <P>(e) If the affected farmer markets his whole milk through a milk handler, a statement from the milk handler showing, for each pay period in the application period, the average price per hundred-weight of whole milk similar in quality to that marketed by the affected farmer during the base period used to determine his normal marketings. If the milk handler has information as to the transportation, administrative, and other costs of marketing which are normally incurred by producers who market through the milk handler but which the affected farmer did not incur because of removal of his whole milk from the market, the average price stated by the milk handler shall be the average gross price paid producers less any such costs. If the milk handler does not have such information, the affected farmer shall furnish a statement setting forth such costs, if any.</P> <P>(f) The amount of proceeds, if any, received by the affected farmer from the marketing of whole milk produced during the application period.</P> <P>(g) The amount of any payments not subject to refund made to the affected farmer by the milk handler with respect to the whole milk produced during the application period and remove from the commercial market.</P> <P>(h) To the extent that such information is available to the affected farmer, the name of any pesticide, chemical, or toxic substance used on the farm within 24 months prior to the application period, the use made of the pesticide, chemical, or toxic substance, the approximate date of such use, and the name of the manufacturer and the registration number, if any, on the label on the container of the pesticide, chemical, or toxic substance.</P> <P>(i) To the extent possible, the source of the pesticide, chemical, or toxic substance that caused the contamination of the whole milk, and the results of any laboratory tests on the feed supply.<PRTPAGE P="121"/> </P> <P>(j) Such other information as the county committee may request to enable the county committee or the Deputy Administrator to make the determinations required in this subpart.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, June 22, 1979]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.7</SECTNO> <SUBJECT>Other requirements for affected farmers.</SUBJECT> <P>An indemnity payment for milk may be made under this subpart to an affected farmer only under the following conditions:</P> <P>(a) If the pesticide, chemical, or toxic substance, contaminating the milk was used by the affected farmer, he established each of the following:</P> <P>(1) That the pesticide, chemical or toxic substance, when used, was registered (if applicable) and approved for use as provided in § 760.2(f);</P> <P>(2) That the contamination of his milk was not the result of his failure to use the pesticide, chemical, or toxic substance, according to the directions and limitations stated on the label;</P> <P>(3) That the contamination of his milk was not otherwise his fault.</P> <P>(b) If the pesticide, chemical, or toxic substance contaminating the milk was not used by the affected farmer, he establishes each of the following:</P> <P>(1) He did not know or have reason to believe that any feed which he purchased and which contaminated his milk contained a harmful residue of a pesticide, a chemical, or a toxic substance or was contaminated by nuclear radiation or fallout.</P> <P>(2) None of the milk was produced by dairy cattle which he knew, or had reason to know at the time he acquired them, were contaminated with residues of pesticides, chemicals or toxic substances, or by nuclear radiation or fallout.</P> <P>(3) The contamination of his milk was not otherwise his fault.</P> <P>(c) The affected farmer has adopted recommended practices for eliminating residues of pesticides, chemicals, or toxic substances or contamination from nuclear radiation or fallout from his milk as soon as practicable following the discovery of the initial contamination.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.8</SECTNO> <SUBJECT>Application for payments for milk.</SUBJECT> <P>The affected farmer or his legal representative, as provided in §§ 760.25 and 760.29, must sign and file an application for payment on a form which is approved for that purpose by the Deputy Administrator. The form must be filed with the county FSA office for the county where the farm headquarters are located no later than December 31 following the end of the fiscal year in which the loss occurred, or such later date as the Deputy Administrator may specify. The application for payment shall cover application periods of at least 28 days, except that, if the entire application period, or the last application period, is shorter than 28 days, applications for payment may be filed for such shorter period. The application for payment shall be accompanied by the information required by § 760.6 as well as any other information which will enable the county committee to determine whether the making of an indemnity payment is precluded for any of the reasons set forth in § 760.7. Such information shall be submitted on forms approved for the purpose by the Deputy Administrator.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended at 51 FR 12986, Apr. 17, 1986; 52 FR 17935, May 13, 1987]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.9</SECTNO> <SUBJECT>Other legal recourse.</SUBJECT> <P>(a) No indemnity payment shall be made for contaminated milk resulting from residues of chemicals or toxic substances if, within 30 days after receiving a complete application, the Deputy Administrator determines that other legal recouse is available to the farmer. An application shall not be deemed complete unless it contains all information necessary to make a determination as to whether other legal recourse is available to the farmer. However, notwithstanding such a determination, the Deputy Administrator may reopen the case at a later date and make a new determination on the merits of the case as may be just and equitable.</P> <P>(b) In the event that a farmer receives an indemnity payment under this subpart, and such farmer is later compensated for the same loss by the <PRTPAGE P="122"/>person (or the representative or successor in interest of such person) responsible for such loss, the indemnity payment shall be refunded by the farmer to the Department of Agriculture: <E T="03">Provided,</E> That the amount of such refund shall not exceed the amount of other compensation received by the farmer.</P> <CITA>[Amdt. 1, 44 FR 36361, June 22, 1979]</CITA> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">Payments to Manufacturers Affected by Pesticides</HD> <SECTION> <SECTNO>§ 760.20</SECTNO> <SUBJECT>Payments to manufacturers of dairy products.</SUBJECT> <P>An indemnity payment may be made to the affected manufacturer who is determined by the Deputy Administrator to be in compliance with all the terms and conditions of this subpart in the amount of the fair market value of the product removed from the commercial market because of pesticide residues, less any amount the manufacturer receives for the product in the form of salvage.</P> <NOTE> <HD SOURCE="HED">Note:</HD> <P>Manufacturers are not eligible for payment when dairy products are contaminated by chemicals, toxic substances (other than pesticides) or nuclear radiation or fallout.</P> </NOTE> <CITA>[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.21</SECTNO> <SUBJECT>Application for payments by manufacturers.</SUBJECT> <P>The affected manufacturer, or his legal representatives, shall file an application for payment with the Deputy Administrator, FSA, Washington, D.C., through the county office serving the county where the contaminated product is located. The application for payment may be in the form of a letter or memorandum. Such letter or memorandum, however, must be accompanied by acceptable documentation to support such application for payment.</P> </SECTION> <SECTION> <SECTNO>§ 760.22</SECTNO> <SUBJECT>Information to be furnished by manufacturer.</SUBJECT> <P>The affected manufacturer shall furnish the Deputy Administrator, through the county committee, complete and accurate information sufficient to enable him to make the determination as to the manufacturer's eligibility to receive an indemnity payment. Such information shall include, but is not limited to:</P> <P>(a) A copy of the notice or other evidence of action by the public agency which resulted in the product being removed from the commerical market.</P> <P>(b) The name of the pesticide causing the removal of the product from the commerical market and, to the extent possible, the source of the pesticide.</P> <P>(c) A record of the quantity of milk or butterfat used to produce the product for which an indemnity payment is requested.</P> <P>(d) The identity of any pesticide used by the affected manufacturer.</P> <P>(e) Such other information as the Deputy Administrator may request to enable him to make the determinations required in this subpart.</P> </SECTION> <SECTION> <SECTNO>§ 760.23</SECTNO> <SUBJECT>Other requirements for manufacturers.</SUBJECT> <P>An indemnity payment may be made under this subpart to an affected manufacturer only under the following conditions:</P> <P>(a) If the pesticide contaminating the product was used by the affected manufacturer, he establishes each of the following: (1) That the pesticide, when used, was registered and recommended for such use as provided in § 760.2(f); (2) that the contamination of his product was not the result of his failure to use the pesticide in accordance with the directions and limitations stated on the label of the pesticide; and (3) that the contamination of his product was not otherwise his fault.</P> <P>(b) If the pesticide contaminating the product was not used by the affected manufacturer: (1) He did not know or have reason to believe that the milk from which the product was processed contained a harmful level of pesticide residue, and (2) the contamination of his product was not otherwise his fault.</P> <P>(c) In the event that a manufacturer receives an indemnity payment under this subpart, and such manufacturer is later compensated for the same loss by the person (or the representative or successor in interest of such person) responsible for such loss, the indemnity payment shall be refunded by the manufacturer to the Department of Agriculture: <E T="03">Provided,</E> That the amount of such refund shall not exceed the <PRTPAGE P="123"/>amount of other compensation received by the manufacturer.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982; 51 FR 12987, Apr. 17, 1986; 52 FR 17935, May 13, 1987]</CITA> </SECTION> </SUBJGRP> <SUBJGRP> <HD SOURCE="HED">General Provisions</HD> <SECTION> <SECTNO>§ 760.24</SECTNO> <SUBJECT>Limitation of authority.</SUBJECT> <P>(a) County executive directors and State and county committees do not have authority to modify or waive any of the provisions of the regulations in this subpart.</P> <P>(b) The State committee may take any action authorized or required by the regulations in this subpart to be taken by the county committee when such action has not been taken by the county committee. The State committee may also:</P> <P>(1) Correct, or require a county committee to correct, any action taken by such county committee which is not in accordance with the regulations in this subpart, or (2) require a county committee to withhold taking any action which is not in accordance with the regulations in this subpart.</P> <P>(c) No delegation herein to a State or county committee shall preclude the Deputy Administrator or his designee from determining any question arising under the regulations in this subpart or from reversing or modifying any determination made by a State or county committee.</P> </SECTION> <SECTION> <SECTNO>§ 760.25</SECTNO> <SUBJECT>Estates and trusts; minors.</SUBJECT> <P>(a) A receiver of an insolvent debtor's estate and the trustee of a trust estate shall, for the purpose of this subpart, be considered to represent an insolvent affected farmer or manufacturer and the beneficiaries of a trust, respectively, and the production of the receiver or trustee shall be considered to be the production of the person or manufacturer he represents. Program documents executed by any such person will be accepted only if they are legally valid and such person has the authority to sign the applicable documents.</P> <P>(b) An affected dairy farmer or manufacturer who is a minor shall be eligible for indemnity payments only if he meets one of the following requirements:</P> <P>(1) The right of majority has been conferred on him by court proceedings or by statute; (2) a guardian has been appointed to manage his property and the applicable program documents are signed by the guardian; or (3) a bond is furnished under which the surety guarantees any loss incurred for which the minor would be liable had he been an adult.</P> <P>(2) [Reserved]</P> </SECTION> <SECTION> <SECTNO>§ 760.26</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>The appeal regulations issued by the Administrator, FSA, part 780 of this chapter, shall be applicable to appeals by dairy farmers or manufacturers from determinations made pursuant to the regulations in this subpart.</P> </SECTION> <SECTION> <SECTNO>§ 760.27</SECTNO> <SUBJECT>Setoffs.</SUBJECT> <P>(a) If the affected farmer or manufacturer is indebted to any agency of the United States and such indebtedness is listed on the county debt record, indemnity payments due the affected farmer or manufacturer under the regulations in this part shall be applied, as provided in the Secretary's setoff regulations, part 13 of this title, to such indebtedness.</P> <P>(b) Compliance with the provisions of this section shall not deprive the affected farmer or manufacturer of any right he would otherwise have to contest the justness of the indebtedness involved in the setoff action, either by administrative appeal or by legal action.</P> </SECTION> <SECTION> <SECTNO>§ 760.28</SECTNO> <SUBJECT>Overdisbursement.</SUBJECT> <P>If the indemnity payment disbursed to an affected farmer or to a manufacturer exceeds the amount authorized under the regulations in this subpart, the affected farmer or manufacturer shall be personally liable for repayment of the amount of such excess.</P> </SECTION> <SECTION> <SECTNO>§ 760.29</SECTNO> <SUBJECT>Death, incompetency, or disappearance.</SUBJECT> <P>In the case of the death, incompetency, or disappearance of any affected farmer or manufacturer who would otherwise receive an indemnity payment, such payment may be made to the person or persons specified in the regulations contained in part 707 of this chapter. The person requesting <PRTPAGE P="124"/>such payment shall file Form FSA-325, “Application for Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been Declared Incompetent,” as provided in that part.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.30</SECTNO> <SUBJECT>Records and inspection thereof.</SUBJECT> <P>(a) The affected farmer, as well as his milk handler and any other person who furnished information to such farmer or to the county committee for the purpose of enabling such farmer to receive a milk indemnity payment under this subpart, shall maintain any existing books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. The affected farmer, his milk handler, and any other person who furnishes such information to the affected farmer or to the county committee shall permit authorized representatives of the Department of Agriculture and the General Accounting Office, during regular business hours, to inspect, examine, and make copies of such books, rec-ords, and accounts.</P> <P>(b) The affected manufacturer or any other person who furnishes information to the Deputy Administrator for the purposes of enabling such manufacturer to receive an indemnity payment under this subpart shall maintain any books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. The affected manufacturer or any other person who furnishes such information to the Deputy Administrator shall permit authorized representatives of the Department of Agriculture and the General Accounting Office, during regular business hours, to inspect, examine, and make copies of such books, records, and accounts.</P> </SECTION> <SECTION> <SECTNO>§ 760.31</SECTNO> <SUBJECT>Assignment.</SUBJECT> <P>No assignment shall be made of any indemnity payment due or to come due under the regulations in this subpart. Any assignment or attempted assignment of any indemnity payment due or to come due under this subpart shall be null and void.</P> </SECTION> <SECTION> <SECTNO>§ 760.32</SECTNO> <SUBJECT>Instructions and forms.</SUBJECT> <P>The Deputy Administrator shall cause to be prepared such forms and instructions as are necessary for carrying out the regulations in this subpart. Affected farmers and manufacturers may obtain information necessary to make application for a dairy indemnity payment from the county FSA office. Form FSA-373—Application for Indemnity Payment, is available at the county ASC office.</P> <CITA>[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.33</SECTNO> <SUBJECT>Availability of funds.</SUBJECT> <P>Payment of indemnity claims will be contingent upon the availability of funds to the Department to pay such claims. With respect to claims filed after October 1, 1982, if the Department determines that the amount of claims to be filed under the program will exceed the funds available to the Department, to pay such claims payments will be made so that each eligible claimant will receive a pro rata share of the remaining funds available to the Department to pay dairy indemnity claims.</P> <APPRO>(Approved by the Office of Management and Budget under control number 0560-0045)</APPRO> <CITA>[48 FR 40367, Sept. 7, 1983 and 49 FR 8906, Mar. 9, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 760.34</SECTNO> <SUBJECT>Paperwork Reduction Act assigned numbers.</SUBJECT> <P>The information collection requirements contained in these regulations (7 CFR part 760) have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control number 0560-0045.</P> <CITA>[49 FR 29564, July 23, 1984]</CITA> </SECTION> </SUBJGRP> </SUBPART> <SUBPART> <RESERVED>Subpart—Beekeeper Indemnity Payment Program (1978-80) [Reserved]</RESERVED> </SUBPART> </PART> <PART> <PRTPAGE P="125"/> <EAR>Pt. 761</EAR> <HD SOURCE="HED">PART 761—GENERAL AND ADMINISTRATIVE</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General Provisions</HD> <SECHD>Sec.</SECHD> <SECTNO>761.1-761.6</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>761.7</SECTNO> <SUBJECT>Appraisals.</SUBJECT> <SECTNO>761.8</SECTNO> <SUBJECT>Loan limitations.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301, 7 U.S.C. 1989.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>64 FR 62567, Nov. 17, 1999, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§§ 761.1-761.6</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 761.7</SECTNO> <SUBJECT>Appraisals.</SUBJECT> <P>(a) <E T="03">General.</E> This section describes requirements for:</P> <P>(1) Real estate and chattel appraisals made in connection with the making and servicing of direct Farm Loan Program and nonprogram loans; and,</P> <P>(2) Appraisal reviews conducted on appraisals made in connection with the making and servicing of direct and guaranteed Farm Loan Program and nonprogram loans.</P> <P>(b) <E T="03">Definitions.</E> </P> <P> <E T="03">Administrative appraisal review</E> means a review of an appraisal to determine if the appraisal:</P> <P>(1) Meets applicable Agency requirements; and</P> <P>(2) Is accurate outside the requirements of standard 3 of USPAP.</P> <P> <E T="03">Agency</E> means the Farm Service Agency, including its employees and state and area committee members, and any successor agency.</P> <P> <E T="03">Farm Loan Programs (FLP) loans</E> refers to Farm Ownership (FO), Soil and Water (SW), Recreation (RL), Economic Opportunity (EO), Operating (OL), Emergency (EM), Economic Emergency (EE), Softwood Timber (ST), and Rural Housing loans for farm service buildings (RHF).</P> <P> <E T="03">Technical appraisal review</E> means a review of an appraisal to determine if such appraisal meets the requirements of USPAP pursuant to standard 3 of USPAP.</P> <P> <E T="03">USPAP (Uniform Standards of Professional Appraisal Practice)</E> means standards governing the preparation, reporting, and reviewing of appraisals established by the Appraisal Foundation pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.</P> <P>(c) <E T="03">Appraisal standards</E>—(1) <E T="03">Real estate.</E> Real estate appraisals, technical appraisal reviews of real estate appraisals, and their respective forms must comply with the standards contained in USPAP, as well as applicable Agency regulations and procedures for the specific Farm Loan Program activity involved. A current copy of USPAP along with other applicable appraisal procedures and regulations is available for review in each Agency State Office.</P> <P>(2) <E T="03">Chattel.</E> An appraisal of chattel property may be completed on an applicable Agency form (available in each Agency State Office) or other format containing the same information.</P> <P>(d) <E T="03">Use of an existing real estate appraisal.</E> The Agency may use an existing real estate appraisal to reach a loan making or servicing decision under either of the following conditions:</P> <P>(1) The appraisal was completed within the previous 12 months and the Agency determines that:</P> <P>(i) The appraisal meets the provisions of this section and the applicable Agency loan making or servicing requirements, and</P> <P>(ii) Current market values have remained stable since the appraisal was completed; or</P> <P>(2) The appraisal was not completed in the previous 12 months, but has been updated by the appraiser or appraisal firm that completed the appraisal, and both the update and original appraisal were completed in accordance with USPAP.</P> <P>(e) <E T="03">Appraisal reviews</E>—(1) <E T="03">Real estate appraisals.</E> With respect to a real estate appraisal, the Agency may conduct a technical appraisal review or an administrative appraisal review, or both.</P> <P>(2) <E T="03">Chattel appraisals.</E> With respect to a chattel appraisal, the Agency may conduct an administrative appraisal review.</P> <CITA>[64 FR 62567, Nov. 17, 1999; 64 FR 69322, Dec 10, 1999; 65 FR 14433, Mar. 17, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 761.8</SECTNO> <SUBJECT>Loan limitations.</SUBJECT> <P>(a) <E T="03">Dollar limits.</E> The outstanding principal balances for a farm loan applicant or anyone who will sign the <PRTPAGE P="126"/>promissory note cannot exceed any of the following:</P> <P>(1) Farm Ownership loans, Beginning Farmer Down payment loans and Soil and Water loans:</P> <P>(i) Direct—$200,000;</P> <P>(ii) Guaranteed—$700,000 (for fiscal year 2000 and increased at the beginning of each fiscal year in accordance with paragraph (b) of this section);</P> <P>(iii) Any combination of a direct Soil and Water loan, direct Farm Ownership loan, guaranteed Soil and Water loan, and guaranteed Farm Ownership loan—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);</P> <P>(2) Operating loans:</P> <P>(i) Direct—$200,000;</P> <P>(ii) Guaranteed—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);</P> <P>(iii) Any combination of a direct Operating loan and guaranteed Operating loan—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);</P> <P>(3) Any combination of guaranteed Farm Ownership loan, guaranteed Soil and Water loan, and guaranteed Operating loan—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);</P> <P>(4) Any combination of direct Farm Ownership loan, direct Soil and Water loan, direct Operating loan, guaranteed Farm Ownership loan, guaranteed Soil and Water loan, and guaranteed Operating loan—the amount in paragraph (a)(1)(ii) of this section plus $200,000;</P> <P>(5) Emergency loans—$500,000;</P> <P>(6) Any combination of direct Farm Ownership loan, direct Soil and Water loan, direct Operating loan, guaranteed Farm Ownership loan, guaranteed Soil and Water loan, guaranteed Operating loan, and Emergency loan—the amount in paragraph (a)(1)(ii) of this section plus $700,000.</P> <P>(b) The dollar limits of guaranteed loans will be increased each fiscal year based on the percentage change in the Prices Paid by Farmers Index as compiled by the National Agricultural Statistics Service, USDA. The maximum loan limits for the current fiscal year are available in any FSA office and on the FSA website at <E T="03">http://www.fsa.usda.gov.</E> </P> <P>(c) <E T="03">Line of credit advances.</E> The total dollar amount of guaranteed line of credit advances and income releases cannot exceed the total estimated expenses, less interest expense, as indicated on the borrower's cash flow budget, unless the cash flow budget is revised and continues to reflect a feasible plan.</P> <CITA>[66 FR 7566, Jan. 24, 2001, as amended at 67 FR 41312, June 18, 2002]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 762</EAR> <HD SOURCE="HED">PART 762—GUARANTEED FARM LOANS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>762.1-762.100</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>762.101</SECTNO> <SUBJECT>Introduction.</SUBJECT> <SECTNO>762.102</SECTNO> <SUBJECT>Abbreviations and definitions.</SUBJECT> <SECTNO>762.103</SECTNO> <SUBJECT>Full faith and credit.</SUBJECT> <SECTNO>762.104</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>762.105</SECTNO> <SUBJECT>Eligibility and substitution of lenders.</SUBJECT> <SECTNO>762.106</SECTNO> <SUBJECT>Preferred and certified lender programs.</SUBJECT> <SECTNO>762.107-762.109</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>762.110</SECTNO> <SUBJECT>Loan application.</SUBJECT> <SECTNO>762.111-762.119</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>762.120</SECTNO> <SUBJECT>Loan applicant eligibility.</SUBJECT> <SECTNO>762.121</SECTNO> <SUBJECT>Loan purposes.</SUBJECT> <SECTNO>762.122</SECTNO> <SUBJECT>Loan limitations.</SUBJECT> <SECTNO>762.123</SECTNO> <SUBJECT>Insurance and farm inspection requirements.</SUBJECT> <SECTNO>762.124</SECTNO> <SUBJECT>Interest rates, terms, charges, and fees.</SUBJECT> <SECTNO>762.125</SECTNO> <SUBJECT>Financial feasibility.</SUBJECT> <SECTNO>762.126</SECTNO> <SUBJECT>Security requirements.</SUBJECT> <SECTNO>762.127</SECTNO> <SUBJECT>Appraisal requirements.</SUBJECT> <SECTNO>762.128</SECTNO> <SUBJECT>Environmental and special laws.</SUBJECT> <SECTNO>762.129</SECTNO> <SUBJECT>Percent of guarantee and maximum loss.</SUBJECT> <SECTNO>762.130</SECTNO> <SUBJECT>Loan approval and issuing the guarantee.</SUBJECT> <SECTNO>762.131-762.139</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>762.140</SECTNO> <SUBJECT>General servicing responsibilities.</SUBJECT> <SECTNO>762.141</SECTNO> <SUBJECT>Reporting requirements.</SUBJECT> <SECTNO>762.142</SECTNO> <SUBJECT>Servicing related to collateral.</SUBJECT> <SECTNO>762.143</SECTNO> <SUBJECT>Servicing distressed accounts.</SUBJECT> <SECTNO>762.144</SECTNO> <SUBJECT>Repurchase of guaranteed portion from a secondary market holder.</SUBJECT> <SECTNO>762.145</SECTNO> <SUBJECT>Restructuring guaranteed loans.</SUBJECT> <SECTNO>762.146</SECTNO> <SUBJECT>Other servicing procedures.</SUBJECT> <SECTNO>762.147</SECTNO> <SUBJECT>Servicing shared appreciation agreements.</SUBJECT> <SECTNO>762.148</SECTNO> <SUBJECT>Bankruptcy.</SUBJECT> <SECTNO>762.149</SECTNO> <SUBJECT>Liquidation.</SUBJECT> <SECTNO>762.150</SECTNO> <SUBJECT>Interest assistance program.</SUBJECT> <SECTNO>762.151-762.158</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>762.159</SECTNO> <SUBJECT>Pledging of guarantee.</SUBJECT> <SECTNO>762.160</SECTNO> <SUBJECT>Assignment of guarantee.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301, 7 U.S.C. 1989.</P> </AUTH> <SOURCE> <PRTPAGE P="127"/> <HD SOURCE="HED">Source:</HD> <P>64 FR 7378, Feb. 12, 1999, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§§ 762.1-762.100</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 762.101</SECTNO> <SUBJECT>Introduction.</SUBJECT> <P>(a) <E T="03">Scope.</E> This subpart contains regulations governing Operating Loans and Farm Ownership loans guaranteed by the Farm Service Agency. This subpart applies to lenders, holders, borrowers, Agency personnel, and other parties involved in making, guaranteeing, holding, servicing, or liquidating such loans.</P> <P>(b) <E T="03">Policy.</E> The Agency issues guarantees on loans made to qualified loan applicants without regard to race, color, religion, sex, national origin, marital status, or age, provided the loan applicant can enter into a legal and binding contract, or whether all or part of the applicant's income derives from any public assistance program or whether the applicant, in good faith, exercises any rights under the Consumer Protection Act.</P> <P>(c) <E T="03">Lender list and classification.</E> (1) The Agency maintains a current list of lenders who express a desire to participate in the guaranteed loan program. This list is made available to farmers upon request.</P> <P>(2) Lenders who participate in the Agency guaranteed loan program will be classified into one of the following categories:</P> <P>(i) Standard Eligible Lender under § 762.105,</P> <P>(ii) Certified Lender, or</P> <P>(iii) Preferred Lender under § 762.106.</P> <P>(3) Lenders may continue to make loans under Approved Lender Program (ALP) agreements until they expire; however, these agreements will not be renewed when they expire. All ALP agreements with farm credit institutions will expire on February 12, 2001.</P> <P>(d) <E T="03">Type of guarantee.</E> Guarantees are available for both a loan note or a line of credit. A loan note is used for a loan of fixed amount and term. A line of credit has a fixed term, but no fixed amount. The principal amount outstanding at any time, however, may not exceed the line of credit ceiling contained in the contract. Both guarantees are evidenced by the same loan guarantee form.</P> <P>(e) <E T="03">Termination of loan guarantee.</E> The loan guarantee will automatically terminate as follows:</P> <P>(1) Upon full payment of the guaranteed loan. A zero balance within the period authorized for advances on a line of credit will not terminate the guarantee;</P> <P>(2) Upon payment of a final loss claim; or</P> <P>(3) Upon written notice from the lender to the Agency that a guarantee is no longer desired provided the lender holds all of the guaranteed portion of the loan. The loan guarantee will be returned to the Agency office for cancellation within 30 days of the date of the notice by the lender.</P> </SECTION> <SECTION> <SECTNO>§ 762.102</SECTNO> <SUBJECT>Abbreviations and definitions.</SUBJECT> <P>(a) <E T="03">Abbreviations.</E> </P> <P>ALP—Approved lender program</P> <P>CLP—Certified lender program</P> <P>CONACT—Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.)</P> <P>EPA—Environmental Protection Agency</P> <P>EIS—Environmental impact statement</P> <P>EM—Emergency loans</P> <P>FO—Farm ownership loans</P> <P>FSA—Farm Service Agency</P> <P>OL—Operating loans</P> <P>PLP—Preferred lender program</P> <P>SW—Soil and water</P> <P>USDA—United States Department of Agriculture</P> <P>(b) <E T="03">Definitions.</E> </P> <P> <E T="03">Additional security.</E> Collateral in excess of that needed to fully secure the loan.</P> <P> <E T="03">Agency.</E> The Farm Service Agency, including its employees and state and area committee members, and any successor agency.</P> <P> <E T="03">Allonge.</E> An attachment or an addendum to a note.</P> <P> <E T="03">Applicant.</E> For guaranteed loans, the lender requesting a guarantee is the applicant. The party applying to the lender for a loan will be considered the loan applicant.</P> <P> <E T="03">Aquaculture.</E> The husbandry of aquatic organisms in a controlled or selected environment. An aquatic organism is any fish, amphibian, reptile, or aquatic <PRTPAGE P="128"/>plant. An aquaculture operation is considered to be a farm only if it is conducted on the grounds which the loan applicant owns, leases, or has an exclusive right to use. An exclusive right to use must be evidenced by a permit issued to the loan applicant and the permit must specifically identify the waters available to be used by the loan applicant only.</P> <P> <E T="03">Assignment of guaranteed portion.</E> A process by which the lender transfers the right to receive payments or income on the guaranteed loan to another party, usually in return for payment in the amount of the loan's guaranteed principal. The lender retains the unguaranteed portion in its portfolio and receives a fee from the purchaser or assignee to service the loan, and receive and remit payments according to a written assignment agreement. This assignment can be reassigned or sold multiple times.</P> <P> <E T="03">Average farm customers.</E> Those conventional farm borrowers who are required to pledge their crops, livestock, and other chattel and real estate security for the loan. This does not include those high-risk farmers with limited security and management ability who are generally charged a higher interest rate by conventional agricultural lenders. Also, this does not include those low-risk farm customers who obtain financing on a secured or unsecured basis, who have as collateral such items as savings accounts, time deposits, certificates of deposit, stocks and bonds, and life insurance, which they are able to pledge for the loan.</P> <P> <E T="03">Basic Security.</E> All farm machinery, equipment, vehicles, foundation and breeding livestock herds and flocks, including replacements, and real estate which serves as security for a loan guaranteed by the Agency.</P> <P> <E T="03">Beginning farmer or rancher.</E> A beginning farmer or rancher is an individual or entity who:</P> <P>(1) Meets the loan eligibility requirements for OL or FO assistance, as applicable, in accordance with this subpart;</P> <P>(2) Has not operated a farm or ranch, or who has operated a farm or ranch for not more than 10 years. This requirement applies to all members of an entity;</P> <P>(3) Will materially and substantially participate in the operation of the farm or ranch:</P> <P>(i) In the case of a loan made to an individual, individually or with the immediate family, material and substantial participation requires that the individual provide substantial day-to-day labor and management of the farm or ranch, consistent with the practices in the county or State where the farm is located.</P> <P>(ii) In the case of a loan made to an entity, all members must materially and substantially participate in the operation of the farm or ranch. Material and substantial participation requires that the individual provide some amount of the management, or labor and management necessary for day-to-day activities, such that if the individual did not provide these inputs, operation of the farm or ranch would be seriously impaired;</P> <P>(4) Agrees to participate in any loan assessment and financial management programs required by Agency regulations;</P> <P>(5) Does not own real farm or ranch property or who, directly or through interests in family farm entities, owns real farm or ranch property, the aggregate acreage of which does not exceed 30 percent of the average farm or ranch acreage of the farms or ranches in the county where the property is located. If the farm is located in more than one county, the average farm acreage of the county where the loan applicant's residence is located will be used in the calculation. If the applicant's residence is not located on the farm or if the loan applicant is an entity, the average farm acreage of the county where the major portion of the farm is located will be used. The average county farm or ranch acreage will be determined from the most recent Census of Agriculture developed by the U.S. Department of Commerce, Bureau of the Census or USDA;</P> <P>(6) Demonstrates that the available resources of the loan applicant and spouse (if any) are not sufficient to enable the loan applicant to enter or continue farming or ranching on a viable scale; and</P> <P>(7) In the case of an entity:<PRTPAGE P="129"/> </P> <P>(i) All the members are related by blood or marriage; and</P> <P>(ii) All the stockholders in a corporation are beginning farmers or ranchers.</P> <P> <E T="03">Borrower.</E> An individual or entity which has outstanding obligations to the lender under any Agency loan or loan guarantee program. A borrower includes all parties liable for Agency debt, including collection-only borrowers, except those whose total loan and accounts have been voluntarily or involuntarily foreclosed or liquidated, or who have been discharged of all Agency debt.</P> <P> <E T="03">Capital leases.</E> Agreements under which the lessee effectively acquires ownership of the asset being leased. A lease is a capital lease if it meets any one of the following criteria:</P> <P>(1) The lease transfers ownership of the property to the lessee at the end of the lease term.</P> <P>(2) The lessee has the right to purchase the property for significantly less than its market value at the end of the lease.</P> <P>(3) The term of the lease is at least 75 percent of the estimated economic life of the leased property.</P> <P>(4) The present value of the minimum lease payments equals or exceeds 90 percent of the fair market value of the leased property.</P> <P> <E T="03">Cash flow budget.</E> A projection listing all anticipated cash inflows (including all farm income, nonfarm income and all loan advances) and all cash outflows (including all farm and nonfarm debt service and other expenses) to be incurred by the borrower during the period of the budget. Cash flow budgets for loans under $50,000 do not require income and expenses itemized by categories. Cash flow budgets for loans under $125,000 do not require income and expenses itemized by categories. It may also be prepared with a breakdown of cash inflows and outflows for each month of the review period and includes the expected outstanding operating credit balance for the end of each month. The latter type is referred to as a “monthly cash flow budget”.</P> <P> <E T="03">Collateral.</E> Property pledged as security for a loan to ensure repayment of an obligation.</P> <P> <E T="03">Conditional commitment.</E> The Agency's commitment to the lender that the material it has submitted is approved subject to the completion of all conditions and requirements contained therein.</P> <P> <E T="03">Consolidation.</E> The combination of outstanding principal and interest balance of two or more OL loans.</P> <P> <E T="03">Controlled.</E> When a director or employee has more than a 50 percent ownership in the entity or, the director or employee, together with relatives of the director or employee, have more than a 50 percent ownership.</P> <P> <E T="03">Cooperative.</E> An entity which has farming as its purpose and whose members have agreed to share the profits of the farming enterprise. The entity must be recognized as a farm cooperative by the laws of the State in which the entity will operate a farm.</P> <P> <E T="03">Cosigner.</E> A party who joins in the execution of a promissory note to assure its repayment. The cosigner becomes jointly and severally liable to comply with the terms of the note. In the case of an entity applicant, the cosigner cannot be a member, partner, joint operator, or stockholder of the entity.</P> <P> <E T="03">County average yield.</E> The historical average yield for a commodity in a particular political subdivision, as determined or published by a government entity or other recognized source.</P> <P> <E T="03">Debt writedown.</E> To reduce the amount of the borrower's debt to that amount that is determined to be collectible based on an analysis of the security value and the borrower's ability to pay.</P> <P> <E T="03">Deferral.</E> A postponement of the payment of interest or principal or both. Principal may be deferred in whole or in part, interest may only be partially deferred.</P> <P> <E T="03">Depreciation and amortization expenses.</E> An annual allocation of the cost or other basic value of tangible capital assets, less salvage value, over the estimated life of the unit (which may be a group of assets), in a systematic and rational manner.</P> <P> <E T="03">Direct loan.</E> A loan serviced by the Agency as lender.</P> <P> <E T="03">Entity.</E> Cooperatives, corporations, partnerships, joint operations, trusts, or limited liability companies.</P> <P> <E T="03">Family farm.</E> A farm which:</P> <P>(1) Produces agricultural commodities for sale in sufficient quantities so <PRTPAGE P="130"/>that it is recognized in the community as a farm rather than a rural residence;</P> <P>(2) Provides enough agricultural income by itself, including rented land, or together with any other dependable income to enable the borrower to:</P> <P>(i) Pay necessary family living and operating expenses;</P> <P>(ii) Maintain essential chattel and real property; and</P> <P>(iii) Pay debts;</P> <P>(3) Is managed by:</P> <P>(i) The borrower when a loan is made to an individual; or,</P> <P>(ii) The members, stockholders, partners, or joint operators responsible for operating the farm when a loan is made to an entity;</P> <P>(4) Has a substantial amount of the labor requirement for the farm and nonfarm enterprise provided by:</P> <P>(i) The borrower and the borrower's immediate family for a loan made to an individual; or</P> <P>(ii) The members, stockholders, partners, or joint operators responsible for operating the farm, along with the families of these individuals, for a loan made to an entity; and</P> <P>(5) May use a reasonable amount of full-time hired labor and seasonal labor during peak load periods.</P> <P> <E T="03">Family living expenses.</E> Any withdrawals from income to provide for needs of family members.</P> <P> <E T="03">Family members.</E> The immediate members of the family residing in the same household with the individual borrower, or, in the case of an entity, with the operator.</P> <P> <E T="03">Farm.</E> A tract or tracts of land, improvements, and other appurtenances which are used or will be used in the production of crops, livestock, or aquaculture products for sale in sufficient quantities so that the property is recognized as a farm rather than a rural residence. The term “farm” also includes any such land and improvements and facilities used in a nonfarm enterprise. It may also include the residence which, although physically separate from the farm acreage, is ordinarily treated as part of the farm in the local community.</P> <P> <E T="03">Feasible plan.</E> A plan is feasible when a borrower or applicant's cash flow budget indicates that there is sufficient cash inflow to pay all cash outflow each year during the term of the loan. If a loan approval or restructuring action exceeds one production cycle and the planned cash flow budget is atypical due to cash or inventory on hand, new enterprises, carryover debt, atypical planned purchases, important operating changes, or other reasons, a cash flow budget must be prepared that reflects a typical cycle. If the request is for only one cycle, a feasible plan for only one cycle is required for approval.</P> <P> <E T="03">Fish.</E> Any aquatic, gilled animal commonly known as “fish” as well as mollusks, or crustaceans (or other invertebrates) produced under controlled conditions (that is, feeding, tending, harvesting, and such other activities as are necessary to properly raise and market the products) in ponds, lakes, streams, artificial enclosures, or similar holding areas.</P> <P> <E T="03">Fixture.</E> An item of personal property attached to real estate in such a way that it cannot be removed without defacing or dismantling the structure, or substantially damaging the structure itself.</P> <P> <E T="03">Graduation.</E> The Agency's determination that a borrower of a direct loan, is financially stable enough to refinance that loan with a commercial lender with or without a guarantee.</P> <P> <E T="03">Guaranteed loan.</E> A loan made and serviced by a lender for which the Agency has entered into a lenders agreement and for which the Agency has issued a loan note guarantee. This term also includes lines of credit except where otherwise indicated.</P> <P> <E T="03">Hazard insurance.</E> Includes fire, windstorm, lightning, hail, explosion, riot, civil commotion, aircraft, vehicles, smoke, builder's risk, public liability, property damage, flood or mudslide, workers compensation, or any similar insurance that is available and needed to protect the security, or that is required by law.</P> <P> <E T="03">Holder.</E> The person or organization other than the lender who holds all or a part of the guaranteed portion of an Agency guaranteed loan but who has no servicing responsibilities. When the lender assigns a part of the guaranteed loan to an assignee by way of execution of an assignment form, the assignee becomes a holder.<PRTPAGE P="131"/> </P> <P> <E T="03">In-house expenses.</E> Expenses associated with credit management and loan servicing by the lender and the lender's contractor. In-house expenses include, but are not limited to: employee salaries, staff lawyers, travel, supplies, and overhead.</P> <P> <E T="03">Interest assistance agreement.</E> The signed agreement between the Agency and the lender setting forth the terms and conditions of the interest assistance.</P> <P> <E T="03">Interest assistance anniversary date.</E> Date on which interest assistance reviews and claims will be effective. This date is established by the lender. Once established, it will not change unless the loan is restructured.</P> <P> <E T="03">Interest assistance review.</E> The yearly review process which includes an analysis of the borrower or applicant's farming operation and need for continued interest assistance, completion of the needs test and request for continuation of interest assistance.</P> <P> <E T="03">Joint operation.</E> Individuals that have agreed to operate a farm or farms together as a business unit. The real and personal property may be owned separately or jointly by the individuals.</P> <P> <E T="03">Land development.</E> Items such as terracing, clearing, leveling, fencing, drainage and irrigation systems, ponds, forestation, permanent pastures, perennial hay crops, basic soil amendments, and other items of land improvements which conserve or permanently enhance productivity.</P> <P> <E T="03">Lender.</E> The organization making and servicing the loan or advancing and servicing the line of credit which is guaranteed under the provisions of Agency regulations. The lender is also the party requesting a guarantee.</P> <P> <E T="03">Lender's agreement.</E> The appropriate Agency form executed by the Agency and the lender setting forth the loan responsibilities of the lender and agency when the loan guarantee is issued.</P> <P> <E T="03">Lien.</E>A legally enforceable hold or claim on the property of another obtained as security for the repayment of indebtedness or an encumbrance on property to enforce payment of an obligation.</P> <P> <E T="03">Liquidation expenses.</E> The cost of an appraisal, due diligence evaluation, environmental assessment, outside attorney fees and other costs incurred as a direct result of liquidating the security for the guaranteed loan. Liquidation fees do not include in-house expenses.</P> <P> <E T="03">Loan or line of credit agreement.</E> A document which contains certain lender and borrower agreements, conditions, limitations, and responsibilities for credit extension and acceptance in a loan format where loan principal balance may fluctuate throughout the term of the document.</P> <P> <E T="03">Loan applicant.</E> The party applying to a lender for a guaranteed loan or line of credit.</P> <P> <E T="03">Loan transaction.</E> Any loan approval or servicing action.</P> <P> <E T="03">Loss claim.</E> A request made to the Agency by a lender to receive a reimbursement based on a percentage of the lender's loss on a loan covered by an Agency guarantee.</P> <P> <E T="03">Loss rate.</E> The net amount of guaranteed OL, FO, and SW loss claims paid on loans made in the past 7 years divided by the total loan amount of OL, FO, and SW made in the past 7 years.</P> <P> <E T="03">Major deficiency.</E> A deficiency that directly affects the soundness of the loan.</P> <P> <E T="03">Majority interest.</E> Any individual or a combination of individuals owning more than a 50 percent interest in a cooperative, corporation, joint operation, or partnership.</P> <P> <E T="03">Market value.</E> The amount which an informed and willing buyer would pay an informed and willing, but not forced, seller in a completely voluntary sale.</P> <P> <E T="03">Minor deficiency.</E> A deficiency that violates Agency regulations, but does not affect the soundness of a loan.</P> <P> <E T="03">Mortgage.</E> A legal instrument giving the lender a security interest or lien on real or personal property of any kind.</P> <P> <E T="03">Negligent servicing.</E> The failure to perform those services which would be considered normal industry standards of loan management or failure to comply with any servicing requirement of this subpart or the lenders agreement or the guarantee. The term includes the concept of a failure to act or failure to act timely consistent with actions of a reasonable lender in loan making, servicing, and collection.<PRTPAGE P="132"/> </P> <P> <E T="03">Net farm operating income.</E> The gross income generated by a farming operation annually, minus all yearly operating expenses (including withdrawals from entities for living expenses), operating loan interest, interest on term debt and capital lease payments, and depreciation and amortization expenses. Net farm operating income does not include off-farm income and social security taxes, carryover debt and delinquent interest.</P> <P> <E T="03">Net recovery value.</E> The market value of the security property assuming that it will be acquired by the lender, and sold for its highest and best use, less the lender's costs of property acquisition, retention, maintenance, and liquidation.</P> <P> <E T="03">Nonessential asset.</E> Assets in which the borrower has an ownership interest that do not contribute an income to pay essential family living expenses or maintain a sound farming operation, and are not exempt from judgment creditors.</P> <P> <E T="03">Normal income security.</E> All security not considered basic security.</P> <P> <E T="03">Partnership.</E> Any entity consisting of two or more individuals who have agreed to operate a farm as one business unit. The entity must be recognized as a partnership by the laws of the State in which the entity will operate and must be authorized to own both real estate and personal property and to incur debts in its own name.</P> <P> <E T="03">Potential liquidation value.</E> The amount of the lender's protective bid at the foreclosure sale. Potential liquidation value is determined by an independent appraiser using comparables from other forced liquidation sales.</P> <P> <E T="03">Present value.</E> The present worth of a future stream of payments discounted to the current date.</P> <P> <E T="03">Presidentially-designated emergency.</E> A major disaster or emergency designated by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 <E T="03">et seq.</E>)</P> <P> <E T="03">Primary security.</E> The minimum amount of collateral needed to fully secure a proposed loan.</P> <P> <E T="03">Principals of borrowers.</E> Includes owners, officers, directors, entities and others directly involved in the operation and management of a business.</P> <P> <E T="03">Protective advances.</E> Advances made by a lender to protect or preserve the collateral itself from loss or deterioration. Protective advances include but are not limited to:</P> <P>(1) Payment of delinquent taxes,</P> <P>(2) Annual assessments,</P> <P>(3) Ground rents,</P> <P>(4) Hazard or flood insurance premiums against or affecting the collateral,</P> <P>(5) Harvesting costs,</P> <P>(6) Other expenses needed for emergency measures to protect the collateral.</P> <P> <E T="03">Recapture.</E> The amount that a guaranteed lender is entitled to recover from a guaranteed loan borrower in consideration for the lender writing down a portion of their guaranteed loan debt when that loan was secured by real estate and that real estate increases in value. Also, the act of collecting shared appreciation.</P> <P> <E T="03">Related by blood or marriage.</E> Individuals who are connected to one another as husband, wife, parent, child, brother, or sister.</P> <P> <E T="03">Relative.</E> An individual or spouse and anyone having the following relationship to either: parent, son, daughter, sibling, stepparent, stepson, stepdaughter, stepbrother, stepsister, half brother, half sister, uncle, aunt, nephew, niece, grandparent, granddaughter, grandson, and the spouses of the foregoing.</P> <P> <E T="03">Rescheduling.</E> To rewrite the rates and terms of a single note or line of credit agreement.</P> <P> <E T="03">Restructuring.</E> Changing terms of a debt through either a rescheduling, deferral, or writedown or a combination thereof.</P> <P> <E T="03">Security.</E> Property of any kind subject to a real or personal property lien. Any reference to “collateral” or “security property” shall be considered a reference to the term “security.”</P> <P> <E T="03">Shared appreciation agreement.</E> An agreement between a guaranteed lender and borrower that requires a borrower that has received a write down on a guaranteed loan secured by real estate to repay the lender some or all of the writedown received, based on a percentage of any increase in the value <PRTPAGE P="133"/>of that real estate at some future date, if certain conditions exist.</P> <P> <E T="03">State.</E> The major political subdivision of the United States and the organization of program delivery for the Agency.</P> <P> <E T="03">Subordination.</E> A document executed by a lender to relinquish their priority of lien in favor of another lender that provides the other lender with a priority right to collect a debt of a specific dollar amount from the sale of the same collateral.</P> <P> <E T="03">Subsequent loans.</E> Any loans processed by the Agency after an initial loan has been made to the same borrower.</P> <P> <E T="03">Transfer and assumption.</E> The conveyance by a debtor to an assuming party of the assets, collateral, and liabilities of the loan in return for the assuming party's binding promise to pay the debt outstanding.</P> <P> <E T="03">Typical plan.</E> A projected income and expense statement listing all anticipated cash flows for a typical 12-month production cycle; including all farm and nonfarm income and all expenses (including debt service) to be incurred by the borrower during such period.</P> <P> <E T="03">Unaccounted for security.</E> Items, as indicated on the lender's loan application, request for guarantee, or any interim agreements provided to the Agency, that are security for the guaranteed loan that were misplaced, stolen, sold, or otherwise missing, where replacement security was not obtained or the proceeds from their sale have not been applied to the loan.</P> <P> <E T="03">United States.</E> The United States itself, each of the several States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.</P> <P> <E T="03">Veteran.</E> Any person who served in the military, naval, or air service during any war as defined in section 101(12) of title 38, United States Code.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001; 68 FR 7695, Feb. 18, 2003; 69 FR 5262, Feb. 4, 2004; 70 FR 56107, Sept. 26, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.103</SECTNO> <SUBJECT>Full faith and credit.</SUBJECT> <P>(a) <E T="03">Fraud and misrepresentation.</E> The loan guarantee constitutes an obligation supported by the full faith and credit of the United States. The Agency may contest the guarantee only in cases of fraud or misrepresentation by a lender or holder, in which:</P> <P>(1) The lender or holder had actual knowledge of the fraud or misrepresentation at the time it became the lender or holder, or</P> <P>(2) The lender or holder participated in or condoned the fraud or misrepresentation.</P> <P>(b) <E T="03">Lender violations.</E> The loan guarantee cannot be enforced by the lender, regardless of when the Agency discovers the violation, to the extent that the loss is a result of:</P> <P>(1) Violation of usury laws;</P> <P>(2) Negligent servicing;</P> <P>(3) Failure to obtain the required security; or,</P> <P>(4) Failure to use loan funds for purposes specifically approved by the Agency.</P> <P>(c) <E T="03">Enforcement by holder.</E> The guarantee and right to require purchase will be directly enforceable by the holder even if:</P> <P>(1) The loan guarantee is contestable based on the lender's fraud or misrepresentation; or</P> <P>(2) The loan note guarantee is unenforceable by the lender based on a lender violation.</P> </SECTION> <SECTION> <SECTNO>§ 762.104</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) The loan applicant or borrower and lender must jointly execute the written request for review of an alleged adverse decision made by the Agency. However, in cases where the Agency has denied or reduced the amount of the final loss payment, the decision may be appealed by the lender only.</P> <P>(b) A decision made by the lender adverse to the borrower is not a decision by the Agency, whether or not concurred in by the Agency, and may not be appealed.</P> <P>(c) The lender or Agency may request updated information from the borrower to implement an appeal decision.</P> <P>(d) Appeals will be handled in accordance with parts 11 and 780 of this title.</P> </SECTION> <SECTION> <SECTNO>§ 762.105</SECTNO> <SUBJECT>Eligibility and substitution of lenders.</SUBJECT> <P>(a) <E T="03">General.</E> To participate in FSA guaranteed farm loan programs, a lender must meet the eligibility criteria in <PRTPAGE P="134"/>this part. The standard eligible lender must demonstrate eligibility and provide such evidence as the Agency may request.</P> <P>(b) <E T="03">Standard eligible lender eligibility criteria.</E> (1) A lender must have experience in making and servicing agricultural loans and have the capability to make and service the loan for which a guarantee is requested;</P> <P>(2) The lenders must not have losses or deficiencies in processing and servicing guaranteed loans above a level which would indicate an inability to properly process and service a guaranteed agricultural loan.</P> <P>(3) A lender must be subject to credit examination and supervision by an acceptable State or Federal regulatory agency;</P> <P>(4) The lender must maintain an office near enough to the collateral's location so it can properly and efficiently discharge its loan making and loan servicing responsibilities or use Agency approved agents, correspondents, branches, or other institutions or persons to provide expertise to assist in carrying out its responsibilities. The lender must be a local lender unless it:</P> <P>(i) Normally makes loans in the region or geographic location in which the loan applicant's operation being financed is located, or</P> <P>(ii) Demonstrates specific expertise in making and servicing loans for the proposed operation.</P> <P>(5) The lender, its officers, or agents must not be debarred or suspended from participation in Government contracts or programs or be delinquent on a Government debt.</P> <P>(c) <E T="03">Substitution of lenders.</E> A new eligible lender may be substituted for the original lender, upon the original lender's concurrence, under the following conditions:</P> <P>(1) The Agency approves of the substitution in writing by executing a modification of the guarantee to identify the new lender, the amount of debt at the time of the substitution and any new loan terms if applicable.</P> <P>(2) The new lender agrees in writing to:</P> <P>(i) Assume all servicing and other responsibilities of the original lender and to acquire the unguaranteed portion of the loan;</P> <P>(ii) Execute a lender's agreement if one is not in effect;</P> <P>(iii) [Reserved]</P> <P>(iv) Give any holder written notice of the substitution. If the rate and terms are changed, written concurrence from the holder is required.</P> <P>(3) The original lender will:</P> <P>(i) Assign their promissory note, lien instruments, loan agreements, and other documents to the new lender.</P> <P>(ii) If the loan is subject to an existing interest assistance agreement, submit a request for subsidy for the partial year that it has owned the loan.</P> <P>(d) <E T="03">Lender name or ownership changes.</E> (1) When a lender begins doing business under a new name or undergoes an ownership change the lender will notify the Agency.</P> <P>(2) The lender's CLP or PLP status is subject to reconsideration when ownership changes.</P> <P>(3) The lender will execute a new lender's agreement when ownership changes.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.106</SECTNO> <SUBJECT>Preferred and certified lender programs.</SUBJECT> <P>(a) <E T="03">General.</E> (1) Lenders who desire PLP or CLP status must prepare a written request addressing:</P> <P>(i) The States in which they desire to receive PLP or CLP status and their branch offices which they desire to be considered by the Agency for approval; and</P> <P>(ii) Each item of the eligibility criteria for PLP or CLP approval in this section, as appropriate.</P> <P>(2) The lender may include any additional supporting evidence or other information the lender believes would be helpful to the Agency in making its determination.</P> <P>(3) The lender must send its request to the Agency State office for the State in which the lender's headquarters is located.</P> <P>(4) The lender must provide any additional information requested by the Agency to process a PLP or CLP request if the lender continues with the approval process.</P> <P>(b) <E T="03">CLP criteria.</E> The lender must meet the following requirements to obtain CLP status:<PRTPAGE P="135"/> </P> <P>(1) Qualify as a standard eligible lender under § 762.105;</P> <P>(2) Have a lender loss rate not in excess of the maximum CLP loss rate established by the Agency and published periodically in a <E T="04">Federal Register</E> Notice. The Agency may waive the loss rate criteria for those lenders whose loss rate was substantially affected by a disaster as defined in part 1945, subpart A, of this title.</P> <P>(3) Have proven an ability to process and service Agency guaranteed loans by showing that the lender:</P> <P>(i) Submitted substantially complete and correct guaranteed loan applications; and</P> <P>(ii) Serviced all guaranteed loans according to Agency regulations;</P> <P>(4) Have made the minimum number of guaranteed OL, FO, or Soil and Water (SW) loans established by the Agency and published periodically in a <E T="04">Federal Register</E> Notice.</P> <P>(5) Not be under any regulatory enforcement action such as a cease and desist order, written agreement, or an appointment of conservator or receiver, based upon financial condition;</P> <P>(6) Designate a qualified person or persons to process and service Agency guaranteed loans for each of the lender offices which will process CLP loans. To be qualified, the person must meet the following conditions:</P> <P>(i) Have attended Agency sponsored training in the past 12 months or will attend training in the next 12 months; and</P> <P>(ii) Agree to attend Agency sponsored training each year;</P> <P>(7) Use forms acceptable to the Agency for processing, analyzing, securing, and servicing Agency guaranteed loans and lines of credit;</P> <P>(c) <E T="03">PLP criteria.</E> The lender must meet the following requirements to obtain PLP status:</P> <P>(1) Meet the CLP eligibility criteria under this section.</P> <P>(2) Have a credit management system, satisfactory to the Agency, based on the following:</P> <P>(i) The lender's written credit policies and underwriting standards;</P> <P>(ii) Loan documentation requirements;</P> <P>(iii) Exceptions to policies;</P> <P>(iv) Analysis of new loan requests;</P> <P>(v) Credit file management;</P> <P>(vi) Loan funds and collateral management system;</P> <P>(vii) Portfolio management;</P> <P>(viii) Loan reviews;</P> <P>(ix) Internal credit review process;</P> <P>(x) Loan monitoring system; and</P> <P>(xi) The board of director's responsibilities.</P> <P>(3) Have made the minimum number of guaranteed OL, FO, or SW loans established by the Agency and published periodically in a <E T="04">Federal Register</E> Notice.</P> <P>(4) Have a lender loss rate not in excess of the rate of the maximum PLP loss rate established by the Agency and published periodically in a <E T="04">Federal Register</E> Notice. The Agency may waive the loss rate criteria for those lenders whose loss rate was substantially affected by a disaster as defined in part 1945, subpart A, of this title.</P> <P>(5) Show a consistent practice of submitting applications for guaranteed loans containing accurate information supporting a sound loan proposal.</P> <P>(6) Show a consistent practice of processing Agency guaranteed loans without recurring major or minor deficiencies.</P> <P>(7) Demonstrate a consistent, above average ability to service guaranteed loans based on the following:</P> <P>(i) Borrower supervision and assistance;</P> <P>(ii) Timely and effective servicing; and</P> <P>(iii) Communication with the Agency.</P> <P>(8) Designate a person or persons, either by name, title, or position within the organization, to process and service PLP loans forthe Agency.</P> <P>(d) <E T="03">CLP and PLP approval.</E> (1) If a lender applying for CLP or PLP status is or has recently been involved in a merger or acquisition, all loans and losses attributed to both lenders will be considered in the eligibility calculations.</P> <P>(2) The Agency will determine which branches of the lender have the necessary experience and ability to participate in the CLP or PLP program based on the information submitted in the lender application and on Agency experience.<PRTPAGE P="136"/> </P> <P>(3) Lenders who meet the criteria will be granted CLP or PLP status for a period not to exceed 5 years.</P> <P>(4) PLP status will be conditioned on the lender carrying out its credit management system as proposed in its request for PLP status and any additional loan making or servicing requirements agreed to and documented the PLP lender's agreement. If the PLP lender's agreement does not specify any agreed upon process for a particular action, the PLP lender will act according to regulations governing CLP lenders.</P> <P>(e) <E T="03">Monitoring CLP and PLP lenders.</E> CLP and PLP lenders will provide information and access to records upon Agency request to permit the Agency to audit the lender for compliance with these regulations.</P> <P>(f) <E T="03">Renewal of CLP or PLP status.</E> (1) PLP or CLP status will expire within a period not to exceed 5 years from the date the lender's agreement is executed, unless a new lender's Agreement is executed.</P> <P>(2) Renewal of PLP or CLP status is not automatic. A lender must submit a written request for renewal of a lender's agreement with PLP or CLP status which includes information:</P> <P>(i) Updating the material submitted in the initial application; and,</P> <P>(ii) Addressing any new criteria established by the Agency since the initial application.</P> <P>(3) PLP or CLP status will be renewed if the applicable eligibility criteria under this section are met, and no cause exists for denying renewal under paragraph (g) of this section.</P> <P>(g) <E T="03">Revocation of PLP or CLP status.</E> (1) The Agency may revoke the lender's PLP or CLP status at any time during the 5 year term for cause.</P> <P>(2) Any of the following instances constitute cause for revoking or not renewing PLP or CLP status:</P> <P>(i) Violation of the terms of the lender's agreement;</P> <P>(ii) Failure to maintain PLP or CLP eligibility criteria;</P> <P>(iii) Knowingly submitting false or misleading information to the Agency;</P> <P>(iv) Basing a request on information known to be false;</P> <P>(v) Deficiencies that indicate an inability to process or service Agency guaranteed farm loan programs loans in accordance with this subpart;</P> <P>(vi) Failure to correct cited deficiencies in loan documents upon notification by the Agency;</P> <P>(vii) Failure to submit status reports in a timely manner;</P> <P>(viii) Failure to use forms, or follow credit management systems (for PLP lenders) accepted by the Agency; or</P> <P>(ix) Failure to comply with the reimbursement requirements of § 762.144(c)(7).</P> <P>(3) A lender which has lost PLP or CLP status must be reconsidered for eligibility to continue as a Standard Eligible Lender (for former PLP and CLP lenders), or as a CLP lender (for former PLP lenders) in submitting loan guarantee requests. They may reapply for CLP or PLP status when the problem causing them to lose their status has been resolved.</P> <CITA>[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999, as amended at 70 FR 56107, Sept. 26, 2005]</CITA> <EAR>§ 762.110</EAR> </SECTION> <SECTION> <SECTNO>§§ 762.107-762.109</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 762.110</SECTNO> <SUBJECT>Loan application.</SUBJECT> <P>(a) <E T="03">Loans for $125,000 or less.</E> All lenders except PLP lenders will submit the following items:</P> <P>(1) A complete application for loans of $125,000 or less must, at least, consist of:</P> <P>(i) The application form;</P> <P>(ii) Loan narrative;</P> <P>(iii) Balance sheet;</P> <P>(iv) Cash flow budget;</P> <P>(v) Credit report;</P> <P>(vi) A plan for servicing the loan.</P> <P>(2) In addition to the minimum requirements, the lender will perform at least the same level of evaluation and documentation for a guaranteed loan that the lender typically performs for non-guaranteed loans of a similar type and amount.</P> <P>(3) The $125,000 threshold includes any single loan, or package of loans submitted for consideration at any one time. A lender must not split a loan into two or more parts to meet the threshold thereby avoiding additional documentation.</P> <P>(4) The Agency may require lenders with a lender loss rate in excess of the <PRTPAGE P="137"/>rate for CLP lenders to assemble additional documentation from paragraph (b) of this section.</P> <P>(b) <E T="03">Loans over $125,000.</E> A complete application for loans over $50,000 will consist of the items required in paragraph (a) of this section plus the following:</P> <P>(1) Verification of income;</P> <P>(2) Verification of debts over $1,000;</P> <P>(3) Three years financial history;</P> <P>(4) Three years of production history (for standard eligible lenders only);</P> <P>(5) Proposed loan agreements; and,</P> <P>(6) If construction or development is planned, a copy of the plans, specifications, and development schedule.</P> <P>(c) <E T="03">Applications from PLP lenders.</E> Notwithstanding paragraphs (a) and (b) of this section, a complete application for PLP lenders will consist of at least:</P> <P>(1) An application form;</P> <P>(2) A loan narrative; and</P> <P>(3) Any other items agreed to during the approval of the PLP lender's status and contained in the PLP lender agreement.</P> <P>(d) <E T="03">Submitting applications.</E> (1) All lenders must compile and maintain in their files a complete application for each guaranteed loan. See paragraphs (a), (b), and (c) of this section.</P> <P>(2) The Agency will notify CLP lenders which items to submit to the Agency.</P> <P>(3) PLP lenders will submit applications in accordance with their agreement with the Agency for PLP status.</P> <P>(4) CLP and PLP lenders must certify that the required items, not submitted, are in their files.</P> <P>(5) The Agency may request additional information from any lender or review the lender's loan file as needed to make eligibility and approval decisions.</P> <P>(e) <E T="03">Incomplete applications.</E> If the lender does not provide the information needed to complete its application by the deadline established in an Agency request for the information, the application will be considered withdrawn by the lender.</P> <P>(f) <E T="03">Conflict of interest.</E> (1) When a lender submits the application for a guaranteed loan, the lender will inform the Agency in writing of any relationship which may cause an actual or potential conflict of interest.</P> <P>(2) Relationships include:</P> <P>(i) The lender or its officers, directors, principal stockholders (except stockholders in a Farm Credit System institution that have stock requirements to obtain a loan), or other principal owners having a financial interest (other than lending relationships in the normal course of business) in the loan applicant or borrower.</P> <P>(ii) The loan applicant or borrower, a relative of the loan applicant or borrower, anyone residing in the household of the loan applicant or borrower, any officer, director, stockholder or other owner of the loan applicant or borrower holds any stock or other evidence of ownership in the lender.</P> <P>(iii) The loan applicant or borrower, a relative of the loan applicant or borrower, or anyone residing in the household of the loan applicant or borrower is an Agency employee.</P> <P>(iv) The officers, directors, principal stockholders (except stockholders in a Farm Credit System institution that have stock requirements to obtain a loan), or other principal owners of the lender have substantial business dealings (other than in the normal course of business) with the loan applicant or borrower.</P> <P>(v) The lender or its officers, directors, principal stockholders, or other principal owners have substantial business dealings with an Agency employee.</P> <P>(3) The lender must furnish additional information to the Agency upon request.</P> <P>(4) The Agency will not approve the application until the lender develops acceptable safeguards to control any actual or potential conflicts of interest.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 7695, Feb. 18, 2003]</CITA> </SECTION> <SECTION> <SECTNO>§§ 762.111-762.119</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 762.120</SECTNO> <SUBJECT>Loan applicant eligibility.</SUBJECT> <P>Loan applicants must meet all of the following requirements to be eligible for a guaranteed OL or a guaranteed FO:</P> <P>(a) <E T="03">Agency loss.</E> (1) Except as provided in paragraph (a)(2) of this section, the applicant, and anyone who will execute the promissory note, has not caused <PRTPAGE P="138"/>the Agency a loss by receiving debt forgiveness on all or a portion of any direct or guaranteed loan made under the authority of the CONACT by debt write-down or write-off; compromise, adjustment, reduction, or charge-off under the provisions of section 331 of the CONACT; discharge in bankruptcy; or through payment of a guaranteed loss claim on:</P> <P>(i) More than three occasions on or prior to April 4, 1996; or</P> <P>(ii) Any occasion after April 4, 1996.</P> <P>(2) The applicant may receive a guaranteed OL to pay annual farm and ranch operating and family living expenses, provided the applicant meets all other requirements for the loan, if the applicant and anyone who will execute the promissory note:</P> <P>(i) Received a write-down under section 353 of the CONACT;</P> <P>(ii) Is current on payments under a confirmed reorganization plan under chapter 11, 12, or 13 of title 11 of the United States Code; or</P> <P>(iii) Received debt forgiveness on not more than one occasion after April 4, 1996, resulting directly and primarily from a Presidentially-designated emergency for a county or contiguous county in which the applicant operates. Only applicants who were current on all existing direct and guaranteed FSA loans prior to the beginning date of the incidence period for a Presidentially-designated emergency and received debt forgiveness on that debt within three years after the designation of such emergency meet this exception.</P> <P>(b) <E T="03">Delinquent Federal debt.</E> The loan applicant, and anyone who will execute the promissory note, is not delinquent on any Federal debt, other than a debt under the Internal Revenue Code of 1986. (Any debt under the Internal Revenue Code of 1986 may be considered by the lender in determining cash flow and creditworthiness.)</P> <P>(c) <E T="03">Outstanding judgments.</E> The loan applicant, and anyone who will execute the promissory note, have no outstanding unpaid judgment obtained by the United States in any court. Such judgments do not include those filed as a result of action in the United States Tax Courts.</P> <P>(d) <E T="03">Citizenship.</E> (1) The applicant must be a citizen of the United States, a United States non-citizen national, or a qualified alien under applicable Federal immigration laws. For an entity applicant, the majority interest of the entity must be held by members who are United States citizens, United States non-citizen nationals, or qualified aliens under applicable Federal immigration laws.</P> <P>(2) United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.</P> <P>(e) <E T="03">Legal capacity.</E> The loan applicant and all borrowers on the loan must possess the legal capacity to incur the obligations of the loan.</P> <P>(f) <E T="03">False or misleading information.</E> The loan applicant, in past dealings with the Agency, must not have provided the Agency with false or misleading documents or statements.</P> <P>(g) <E T="03">Credit history.</E> (1) The individual or entity loan applicant and all entity members must have acceptable credit history demonstrated by debt repayment.</P> <P>(2) A history of failures to repay past debts as they came due when the ability to repay was within their control will demonstrate unacceptable credit history.</P> <P>(3) Unacceptable credit history will not include:</P> <P>(i) Isolated instances of late payments which do not represent a pattern and were clearly beyond their control; or,</P> <P>(ii) Lack of credit history.</P> <P>(h) <E T="03">Test for credit.</E> (1) The loan applicant is unable to obtain sufficient credit elsewhere without a guarantee to finance actual needs at reasonable rates and terms.</P> <P>(2) The potential for sale of any significant nonessential assets will be considered when evaluating the availability of other credit.</P> <P>(3) Ownership interests in property and income received by an individual or entity loan applicant, and any entity members as individuals will be considered when evaluating the availability of other credit to the loan applicant.</P> <P>(i) <E T="03">For OLs:</E> <PRTPAGE P="139"/> </P> <P>(1) The individual or entity loan applicant must be an operator of not larger than a family farm after the loan is closed.</P> <P>(2) In the case of an entity borrower:</P> <P>(i) The entity must be authorized to operate, and own if the entity is also an owner, a farm in the State or States in which the farm is located; and</P> <P>(ii) If the entity members holding a majority interest are related by marriage or blood, at least one member of the entity must operate the family farm; or,</P> <P>(iii) If the entity members holding a majority interest are not related by marriage or blood, the entity members holding a majority interest must also operate the family farm.</P> <P>(j) <E T="03">For FOs:</E> </P> <P>(1) The individual must be the operator and owner of not larger than a family farm after the loan is closed.</P> <P>(2) In the case of an entity borrower:</P> <P>(i) The entity must be authorized to own and operate a farm in the state or states in which the farm is located; and</P> <P>(ii) If the entity members holding a majority interest are related by marriage or blood, at least one member of the entity also must operate the family farm and at least one member of the entity or the entity must own the family farm; or,</P> <P>(iii) If the entity members holding a majority interest are not related by marriage or blood, the entity members holding a majority interest must operate the family farm and the entity members holding a majority interest or the entity must own the family farm.</P> <P>(k) <E T="03">For entity loan applicants.</E> Entity loan applicants must meet the following additional eligibility criteria:</P> <P>(1) Each entity member's ownership interest may not exceed the family farm definition limits;</P> <P>(2) The collective ownership interest of all entity members may exceed the family farm definition limits only if the following conditions are met:</P> <P>(i) All of the entity members are related by blood or marriage;</P> <P>(ii) All of the members are or will be operators of the entity; and,</P> <P>(iii) The majority interest holders of the entity must meet the requirements of paragraphs (d), (f), (g), and (i) through (j) of this section;</P> <P>(3) The entity must be controlled by farmers or ranchers engaged primarily and directly in farming or ranching in the United States after the loan is made; and</P> <P>(4) The entity members are not themselves entities.</P> <P>(l) Neither the applicant nor any entity member has been convicted of planting, cultivating, growing, producing, harvesting, or storing a controlled substance under Federal or state law within the last five crop years. “Controlled substance” is defined at 21 CFR 1308. Applicants must certify on the application that it and its members, if an entity, have not been convicted of such a crime within the relevant period. If the lender uses the lender's Agency approved forms, the certification may be an attachment to the form.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 62223, Nov. 3, 2003; 69 FR 5262, Feb. 4, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.121</SECTNO> <SUBJECT>Loan purposes.</SUBJECT> <P>(a) <E T="03">Operating Loan purposes.</E> (1) Loan funds disbursed under an OL guarantee may only be used for the following purposes:</P> <P>(i) Payment of costs associated with reorganizing a farm or ranch to improve its profitability;</P> <P>(ii) Purchase of livestock, including poultry, and farm or ranch equipment or fixtures, quotas and bases, and cooperative stock for credit, production, processing or marketing purposes;</P> <P>(iii) Payment of annual farm or ranch operating expenses, examples of which include feed, seed, fertilizer, pesticides, farm or ranch supplies, repairs and improvements which are to be expensed, cash rent and family subsistence;</P> <P>(iv) Payment of scheduled principal and interest payments on term debt provided the debt is for authorized FO or OL purposes;</P> <P>(v) Other farm and ranch needs;</P> <P>(vi) Payment of costs associated with land and water development for conservation or use purposes;</P> <P>(vii) Refinancing indebtedness incurred for any authorized OL purpose, when the lender and loan applicant can demonstrate the need to refinance;</P> <P>(viii) Payment of loan closing costs;<PRTPAGE P="140"/> </P> <P>(ix) Payment of costs associated with complying with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. 655, 667). This purpose is limited to applicants who demonstrate that compliance with the standards will cause them substantial economic injury; and</P> <P>(x) Payment of training costs required or recommended by the Agency.</P> <P>(2) Loan funds under a line of credit may be advanced only for the following purposes:</P> <P>(i) Payment of annual operating expenses, family subsistence, and purchase of feeder animals;</P> <P>(ii) Payment of current annual operating debts advanced for the current operating cycle; (Under no circumstances can carry-over operating debts from a previous operating cycle be refinanced);</P> <P>(iii) Purchase of routine capital assets, such as replacement of livestock, that will be repaid within the operating cycle;</P> <P>(iv) Payment of scheduled, non-delinquent, term debt payments provided the debt is for authorized FO or OL purposes.</P> <P>(v) Purchase of cooperative stock for credit, production, processing or marketing purposes; and</P> <P>(vi) Payment of loan closing costs.</P> <P>(b) <E T="03">Farm ownership loan purposes.</E> Guaranteed FO are authorized only to:</P> <P>(1) Acquire or enlarge a farm or ranch; examples include, but are not limited to, providing down payments, purchasing easements for the loan applicant's portion of land being subdivided, and participating in the beginning farmer downpayment FO program under part 1943, subpart A, of this title;</P> <P>(2) Make capital improvements; examples include, but are not limited to, the construction, purchase, and improvement of a farm dwelling, service buildings and facilities that can be made fixtures to the real estate, (Capital improvements to leased land may be financed subject to the limitations in § 762.122);</P> <P>(3) Promote soil and water conservation and protection; examples include the correction of hazardous environmental conditions, and the construction or installation of tiles, terraces and waterways;</P> <P>(4) Pay closing costs, including but not limited to, purchasing stock in a cooperative and appraisal and survey fees; and</P> <P>(5) Refinancing indebtedness incurred for authorized FO and OL purposes, provided the lender and loan applicant demonstrate the need to refinance the debt.</P> <P>(c) <E T="03">Highly erodible land or wetlands conservation.</E> Loans may not be made for any purpose which contributes to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity. A decision by the Agency to reject an application for this reason may be appealable. An appeal questioning whether the presence of a wetland, converted wetland, or highly erodible land on a particular property must be filed directly with the USDA agency making the determination in accordance with the agency's appeal procedures.</P> <P>(d) <E T="03">Judgment debts.</E> Loans may not be used to satisfy judgments obtained in the United States District courts. However, Internal Revenue Service judgment liens may be paid with loan funds.</P> </SECTION> <SECTION> <SECTNO>§ 762.122</SECTNO> <SUBJECT>Loan limitations.</SUBJECT> <P>(a) <E T="03">OL term limitations.</E> (1) No guaranteed OL shall be made to any loan applicant after the 15th year that a loan applicant, or any individual signing the promissory note, received a direct or guaranteed OL.</P> <P>(2) Notwithstanding paragraph (c)(1) of this section, if a borrower had any combination of direct or guaranteed OL closed in 10 or more prior calendar years prior to October 28, 1992, eligibility to receive new guaranteed OL is extended for 5 additional years from October 28, 1992, and the years need not run consecutively. However, in the case of a line of credit, each year in which an advance is made after October 28, 1992, counts toward the 5 additional years. Once determined eligible, a loan or line of credit may be approved for any authorized term.</P> <P>(b) <E T="03">Leased land.</E> When FO funds are used for improvements to leased land the terms of the lease must provide <PRTPAGE P="141"/>reasonable assurance that the loan applicant will have use of the improvement over its useful life, or provide compensation for any unexhausted value of the improvement if the lease is terminated.</P> <P>(c) <E T="03">Tax-exempt transactions.</E> The Agency will not guarantee any loan made with the proceeds of any obligation the interest on which is excluded from income under section 103 of the Internal Revenue Code of 1986. Funds generated through the issuance of tax-exempt obligations may not be used to purchase the guaranteed portion of any Agency guaranteed loan. An Agency guaranteed loan may not serve as collateral for a tax-exempt bond issue.</P> <P>(d) <E T="03">Floodplain restrictions.</E> The Agency will not guarantee any loan to purchase, build, or expand buildings located in a special 100 year floodplain as defined by FEMA flood hazard area maps unless flood insurance is available and purchased.</P> <CITA>[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999, as amended at 66 FR 7567, Jan. 24, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.123</SECTNO> <SUBJECT>Insurance and farm inspection requirements.</SUBJECT> <P>(a) <E T="03">Insurance.</E> (1) Lenders must require borrowers to maintain adequate property, public liability, and crop insurance to protect the lender and Government's interests.</P> <P>(2) By loan closing, loan applicants must either:</P> <P>(i) Obtain at least the catastrophic risk protection (CAT) level of crop insurance coverage, if available, for each crop of economic significance, as defined by part 402 of this title, or</P> <P>(ii) Waive eligibility for emergency crop loss assistance in connection with the uninsured crop. EM loan assistance under part 1945, subpart D, of this title is not considered emergency crop loss assistance for purposes of this waiver and execution of the waiver does not render the borrower ineligible for EM loans.</P> <P>(3) Loan applicants must purchase flood insurance if buildings are or will be located in a special flood hazard area as defined by FEMA flood hazard area maps and if flood insurance is available.</P> <P>(4) Insurance, including crop insurance, must be obtained as required by the lender or the Agency based on the strengths and weaknesses of the loan.</P> <P>(b) <E T="03">Farm inspections.</E> Before submitting an application the lender must make an inspection of the farm to assess the suitability of the farm and to determine any development that is needed to make it a suitable farm.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 70 FR 56107, Sept. 26, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.124</SECTNO> <SUBJECT>Interest rates, terms, charges, and fees.</SUBJECT> <P>(a) <E T="03">Interest rates.</E> (1) The interest rate on a guaranteed loan or line of credit may be fixed or variable as agreed upon between the borrower and the lender. The lender may charge different rates on the guaranteed and the non-guaranteed portions of the note. The guaranteed portion may be fixed while the unguaranteed portion may be variable, or vice versa. If both portions are variable, different bases may be used.</P> <P>(2) If a variable rate is used, it must be tied to a rate specifically agreed to between the lender and borrower in the loan instruments. Variable rates may change according to the normal practices of the lender for its average farm customers, but the frequency of change must be specified in the loan or line of credit instrument.</P> <P>(3) Neither the interest rate on the guaranteed portion nor the unguaranteed portion may exceed the rate the lender charges its average agricultural loan customer. At the request of the Agency, the lender must provide evidence of the rate charged the average agricultural loan customer. This evidence may consist of average yield data, or documented administrative differential rate schedule formulas used by the lender.</P> <P>(4) Interest must be charged only on the actual amount of funds advanced and for the actual time the funds are outstanding. Interest on protective advances made by the lender to protect the security will be charged at the note rate but limited to paragraph (a)(3) of this section.</P> <P>(5) The lender and borrower may collectively obtain a temporary reduction in the interest rate through the interest assistance program in accordance with § 762.150.<PRTPAGE P="142"/> </P> <P>(b) <E T="03">OL terms.</E> (1) Loan funds or advances on a line of credit used to pay annual operating expenses will be repaid when the income from the year's operation is received, except when the borrower is establishing a new enterprise, developing a farm, purchasing feed while feed crops are being established, or recovering from disaster or economic reverses.</P> <P>(2) The final maturity date for each loan cannot exceed 7 years from the date of the promissory note or line of credit agreement. Advances for purposes other than for annual operating expenses will be scheduled for repayment over the minimum period necessary considering the loan applicant's ability to repay and the useful life of the security, but not in excess of 7 years.</P> <P>(3) All advances on a line of credit must be made within 5 years from the date of the Loan Guarantee.</P> <P>(c) <E T="03">FO terms.</E> Each loan must be scheduled for repayment over a period not to exceed 40 years from the date of the note or such shorter period as may be necessary to assure that the loan will be adequately secured, taking into account the probable depreciation of the security.</P> <P>(d) <E T="03">Balloon installments under loan note guarantee.</E> Balloon payment terms are permitted on FO or OL subject to the following:</P> <P>(1) Extended repayment schedules may include equal, unequal, or balloon installments if needed on any guaranteed loan to establish a new enterprise, develop a farm, or recover from a disaster or an economical reversal.</P> <P>(2) Loans with balloon installments must have adequate collateral at the time the balloon installment comes due. Crops, livestock other than breeding livestock, or livestock products produced are not sufficient collateral for securing such a loan.</P> <P>(3) The borrower must be projected to be able to refinance the remaining debt at the time the balloon payment comes due based on the expected financial condition of the operation, the depreciated value of the collateral, and the principal balance on the loan.</P> <P>(e) <E T="03">Charges and Fees.</E> (1) The lender may charge the loan applicant and borrower fees for the loan provided they are no greater than those charged to unguaranteed customers for similar transactions. Similar transactions are those involving the same type of loan requested (for example, operating loans or farm real estate loans).</P> <P>(2) Late payment charges (including default interest charges) are not covered by the guarantee. These charges may not be added to the principal and interest due under any guaranteed note or line of credit. However, late payment charges may be made outside of the guarantee if they are routinely made by the lender in similar types of loan transactions.</P> <P>(3) Lenders may not charge a loan origination and servicing fee greater than 1 percent of the loan amount for the life of the loan when a guaranteed loan is made in conjunction with a down payment FO for beginning farmers under part 1943, subpart A, of this title.</P> </SECTION> <SECTION> <SECTNO>§ 762.125</SECTNO> <SUBJECT>Financial feasibility.</SUBJECT> <P>(a) <E T="03">General.</E> (1) Notwithstanding any other provision of this section, PLP lenders will follow their internal procedures on financial feasibility as agreed to by the Agency during PLP certification.</P> <P>(2) The loan applicant's proposed operation must project a feasible plan as defined in § 762.102(b).</P> <P>(3) For standard eligible lenders, the projected income and expenses of the borrower and operation used to determine a feasible plan must be based on the loan applicant's proven record of production and financial management.</P> <P>(4) For CLP lenders, the projected income and expenses of the borrower and the operation must be based on the loan applicant's financial history and proven record of financial management.</P> <P>(5) For those farmers without a proven history, a combination of any actual history and any other reliable source of information that are agreeable with the lender, the loan applicant, and the Agency will be used.</P> <P>(6) The cash flow budget analyzed to determine a feasible plan must represent the predicted cash flow of the operating cycle.</P> <P>(7) Lenders must use price forecasts that are reasonable and defensible. <PRTPAGE P="143"/>Sources must be documented by the lender and acceptable to the Agency.</P> <P>(8) When a feasible plan depends on income from other sources in addition to income from owned land, the income must be dependable and likely to continue.</P> <P>(9) The lender will analyze business ventures other than the farm operation to determine their soundness and contribution to the operation. Guaranteed loan funds will not be used to finance a nonfarm enterprise. Nonfarm enterprises include, but are not limited to: raising earthworms, exotic birds, tropical fish, dogs, or horses for nonfarm purposes; welding shops; boarding horses; and riding stables.</P> <P>(10) When the loan applicant has or will have a cash flow budget developed in conjunction with a proposed or existing Agency direct loan, the two cash flow budgets must be consistent.</P> <P>(b) <E T="03">Estimating production.</E> (1) Standard eligible lenders must use the best sources of information available for estimating production in accordance with this subsection when developing cash flow budgets.</P> <P>(2) Deviations from historical performance may be acceptable, if specific to changes in operation and adequately justified and acceptable to the Agency.</P> <P>(3) For existing farmers, actual production for the past 3 years will be utilized.</P> <P>(4) For those farmers without a proven history, a combination of any actual history and any other reliable source of information that are agreeable with the lender, the loan applicant, and the Agency will be used.</P> <P>(5) When the production of a growing commodity can be estimated, it must be considered when projecting yields.</P> <P>(6) When the loan applicant's production history has been so severely affected by a declared disaster that an accurate projection cannot be made, the following applies:</P> <P>(i) County average yields are used for the disaster year if the loan applicant's disaster year yields are less than the county average yields. If county average yields are not available, State average yields are used. Adjustments can be made, provided there is factual evidence to demonstrate that the yield used in the farm plan is the most probable to be realized.</P> <P>(ii) To calculate a historical yield, the crop year with the lowest actual or county average yield may be excluded, provided the loan applicant's yields were affected by disasters at least 2 of the previous 5 consecutive years.</P> <P>(c) <E T="03">Refinancing.</E> Loan guarantee requests for refinancing must ensure that a reasonable chance for success still exists. The lender must demonstrate that problems with the loan applicant's operation that have been identified, can be corrected, and the operation returned to a sound financial basis.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.126</SECTNO> <SUBJECT>Security requirements.</SUBJECT> <P>(a) <E T="03">General.</E> (1) The lender is responsible for ensuring that proper and adequate security is obtained and maintained to fully secure the loan, protect the interest of the lender and the Agency, and assure repayment of the loan or line of credit.</P> <P>(2) The lender will obtain a lien on additional security when necessary to protect the Agency's interest.</P> <P>(b) <E T="03">Guaranteed and unguaranteed portions.</E> (1) All security must secure the entire loan or line of credit. The lender may not take separate security to secure only that portion of the loan or line of credit not covered by the guarantee.</P> <P>(2) The lender may not require compensating balances or certificates of deposit as means of eliminating the lender's exposure on the unguaranteed portion of the loan or line of credit. However, compensating balances or certificates of deposit as otherwise used in the ordinary course of business are allowed for both the guaranteed and unguaranteed portions.</P> <P>(c) <E T="03">Identifiable security.</E> The guaranteed loan must be secured by identifiable collateral. To be identifiable, the lender must be able to distinguish the collateral item and adequately describe it in the security instrument.</P> <P>(d) <E T="03">Type of security.</E> (1) Guaranteed loans may be secured by any property if the term of the loan and expected life of the property will not cause the loan to be undersecured.<PRTPAGE P="144"/> </P> <P>(2) For loans with terms greater than 7 years, a lien must be taken on real estate.</P> <P>(3) Loans can be secured by a mortgage on leasehold properties if the lease has a negotiable value and is subject to being mortgaged.</P> <P>(4) The lender or Agency may require additional personal and corporate guarantees to adequately secure the loan. These guarantees are separate from, and in addition to, the personal obligations arising from members of an entity signing the note as individuals.</P> <P>(e) <E T="03">Lien position.</E> All guaranteed loans will be secured by the best lien obtainable. Provided that:</P> <P>(1) Any chattel-secured guaranteed loan must have a higher lien priority (including purchase money interest) than an unguaranteed loan secured by the same chattels and held by the same lender.</P> <P>(2) Junior lien positions are acceptable only if the total amount of debt with liens on the security, including the debt in junior lien position, is less than or equal to 85 percent of the value of the security. Junior liens on crops or livestock products will not be relied upon for security unless the lender is involved in multiple guaranteed loans to the same borrower and also has the first lien on the collateral.</P> <P>(3) When taking a junior lien, prior lien instruments will not contain future advance clauses (except for taxes, insurance, or other reasonable costs to protect security), or cancellation, summary forfeiture, or other clauses that jeopardize the Government's or the lender's interest or the borrower's ability to pay the guaranteed loan, unless any such undesirable provisions are limited, modified, waived or subordinated by the lienholder for the benefit of the Agency and the lender.</P> <P>(f) Additional security, or any loan of $10,000 or less may be secured by the best lien obtainable on real estate without title clearance or legal services normally required, provided the lender believes from a search of the county records that the loan applicant can give a mortgage on the farm and provided that the lender would, in the normal course of business, waive the title search. This exception to title clearance will not apply when land is to be purchased.</P> <P>(g) <E T="03">Multiple owners.</E> If security has multiple owners, all owners must execute the security documents for the loan.</P> <P>(h) <E T="03">Exceptions.</E> The Deputy Administrator for Farm Loan Programs has the authority to grant an exception to any of the requirements involving security, if the proposed change is in the best interest of the Government and the collection of the loan will not be impaired.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 70 FR 56107, Sept. 26, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.127</SECTNO> <SUBJECT>Appraisal requirements.</SUBJECT> <P>(a) <E T="03">General.</E> The Agency may require a lender to obtain an appraisal based on the type of security, loan size, and whether it is primary or additional security. Except for authorized liquidation expenses, the lender is responsible for all appraisal costs, which may be passed on to the borrower, or a transferee in the case of a transfer and assumption.</P> <P>(b) <E T="03">Exception.</E> Notwithstanding other provisions of this section, an appraisal is not required for any additional security, or for loans of $50,000 or less if a strong equity position exists.</P> <P>(c) <E T="03">Chattel appraisals.</E> A current appraisal (not more than 12 months old) of primary chattel security is generally required on all loans. An appraisal for loans or lines of credit for annual production purposes that are secured by crops is only required when a guarantee is requested late in the current production year and actual yields can be reasonably estimated. The appraised value of chattel property will be based on public sales of the same, or similar, property in the market area. In the absence of such public sales, reputable publications reflecting market values may be used. Appraisal reports may be on the Agency's appraisal of chattel property form or on any other appraisal form containing at least the same information. Chattel appraisals will be performed by appraisers who possess sufficient experience or training to establish market (not retail) values as determined by the Agency.</P> <P>(d) <E T="03">Real estate appraisals.</E> A current real estate appraisal is required when <PRTPAGE P="145"/>real estate will be primary security. Agency officials may accept an appraisal that is not current if there have been no significant changes in the market or on the subject real estate and the appraisal was either completed within the past 12 months or updated by a qualified appraisal if not completed within the past 12 months.</P> <P>(1) Appraiser qualifications. On loan transactions of $250,000 or less, the lender must demonstrate to the Agency's satisfaction that the appraiser possesses sufficient experience or training to estimate the market value of agricultural property. On loan transactions greater than $250,000, which includes principal plus accrued interest through the closing date, the appraisal must be completed by a State certified general appraiser.</P> <P>(2) Appraisals. Real estate appraisals must be completed in accordance with the Uniform Standards of Professional Appraisal Practice. Appraisals may be either a complete or limited appraisal provided in a self-contained or summary format. Restricted reports, as defined in the Uniform Standards of Professional Appraisal Practice, are not acceptable.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 64 FR 62568, Nov. 17, 1999; 65 FR 14433, Mar. 17, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.128</SECTNO> <SUBJECT>Environmental and special laws.</SUBJECT> <P>(a) <E T="03">Environmental requirements.</E> The requirements found in part 1940, subpart G, of this title must be met for guaranteed OL and FO. CLP and PLP lenders may certify that they have documentation in their file to demonstrate compliance with paragraph (c) of this section. Standard eligible lenders must submit evidence supporting compliance with this section.</P> <P>(b) <E T="03">Determination.</E> The Agency determination of whether an environmental problem exists will be based on:</P> <P>(1) The information supplied with the application;</P> <P>(2) The Agency Official's personal knowledge of the operation;</P> <P>(3) Environmental resources available to the Agency including, but not limited to, documents, third parties, and governmental agencies;</P> <P>(4) A visit to the farm operation when the available information is insufficient to make a determination;</P> <P>(5) Other information supplied by the lender or loan applicant upon Agency request. If necessary, information not supplied with the application will be requested by the Agency.</P> <P>(c) <E T="03">Special requirements.</E> Lenders will assist in the environmental review process by providing environmental information. In all cases, the lender must retain documentation of their investigation in the loan applicant's case file.</P> <P>(1) A determination must be made as to whether there are any potential impacts to a 100 year floodplain as defined by Federal Emergency Management Agency floodplain maps, Natural Resources Conservation Service data, or other appropriate documentation.</P> <P>(2) The lender will assist the borrower in securing any applicable permits or waste management plans. The lender may consult with the Agency for guidance on activities which require consultation with State regulatory agencies, special permitting or waste management plans.</P> <P>(3) The lender will examine the security property to determine if there are any structures or archeological sites which are listed or may be eligible for listing in the National Register of Historic Places. The lender may consult with the Agency for guidance on which situations will need further review in accordance with the National Historical Preservation Act and part 1940, subpart G, and part 1901, subpart F, of this title.</P> <P>(4) The loan applicant must certify they will not violate the provisions of § 363 of the CONACT, the Food Security Act of 1985, and Executive Order 11990 relating to Highly Erodible Land and Wetlands.</P> <P>(5) All lenders are required to ensure that due diligence is performed in conjunction with a request for guarantee of a loan involving real estate. Due diligence is the process of evaluating real estate in the context of a real estate transaction to determine the presence of contamination from release of hazardous substances, petroleum products, or other environmental hazards and determining what effect, if any, <PRTPAGE P="146"/>the contamination has on the security value of the property. The Agency will accept as evidence of due diligence the most current version of the American Society of Testing Materials (ASTM) transaction screen questionnaire available from 100 Barr Harbor Drive, West Conshohocken, Pennsylvania 19428-2959, or similar documentation, approved for use by the Agency, supplemented as necessary by the ASTM phase I environmental site assessments form.</P> <P>(d) <E T="03">Equal opportunity and nondiscrimination.</E> (1) With respect to any aspect of a credit transaction, the lender will not discriminate against any applicant on the basis of race, color, religion, national origin, sex, marital status, or age, provided the applicant can execute a legal contract. Nor will the lender discriminate on the basis of whether all or a part of the applicant's income derives from any public assistance program, or whether the applicant in good faith, exercises any rights under the Consumer Protection Act.</P> <P>(2) Where the guaranteed loan involves construction, the contractor or subcontractor must file all compliance reports, equal opportunity and nondiscrimination forms, and otherwise comply with all regulations prescribed by the Secretary of Labor pursuant to Executive Orders 11246 and 11375.</P> <P>(e) <E T="03">Other Federal, State and local requirements.</E> Lenders are required to coordinate with all appropriate Federal, State, and local agencies and comply with special laws and regulations applicable to the loan proposal.</P> </SECTION> <SECTION> <SECTNO>§ 762.129</SECTNO> <SUBJECT>Percent of guarantee and maximum loss.</SUBJECT> <P>(a) <E T="03">General.</E> The percent of guarantee will not exceed 90 percent based on the credit risk to the lender and the Agency both before and after the transaction. The Agency will determine the percentage of guarantee.</P> <P>(b) <E T="03">Exceptions.</E> The guarantee will be issued at 95 percent in any of the following circumstances:</P> <P>(1) The sole purpose of a guaranteed FO or OL is to refinance an Agency direct farm loan. When only a portion of the loan is used to refinance a direct Agency farm credit program loan, a weighted percentage of a guarantee will be provided;</P> <P>(2) When the purpose of an FO guarantee is to participate in the downpayment loan program;</P> <P>(3) When a guaranteed OL is made to a farmer or rancher who is participating in the Agency's down payment loan program. The guaranteed OL must be made during the period that a borrower has the down payment loan outstanding; or</P> <P>(4) When a guaranteed OL is made to a farmer or rancher whose farm or ranch land is subject to the jurisdiction of an Indian tribe and whose loan is secured by one or more security instruments that are subject to the jurisdiction of an Indian tribe.</P> <P>(c) <E T="03">CLP and PLP guarantees.</E> All guarantees issued to CLP or PLP lenders will not be less than 80 percent.</P> <P>(d) <E T="03">Maximum loss.</E> The maximum amount the Agency will pay the lender under the loan guarantee will be any loss sustained by such lender on the guaranteed portion including:</P> <P>(1) The pro rata share of principal and interest indebtedness as evidenced by the note or by assumption agreement;</P> <P>(2) Any loan subsidy due and owing;</P> <P>(3) The pro rata share of principal and interest indebtedness on secured protective and emergency advances made in accordance with this subpart; and</P> <P>(4) Principal and interest indebtedness on recapture debt pursuant to a shared appreciation agreement. Provided that the lender has paid the Agency its pro rata share of the recapture amount due.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 7695, Feb. 18, 2003]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.130</SECTNO> <SUBJECT>Loan approval and issuing the guarantee.</SUBJECT> <P>(a) <E T="03">Processing timeframes.</E> (1) Standard Eligible Lenders. Complete applications from Standard Eligible Lenders will be approved or rejected, and the lender notified in writing, no later than 30 calendar days after receipt.</P> <P>(2) CLP and PLP lenders.</P> <P>(i) Complete applications from CLP or PLP lenders will be approved or rejected not later than 14 calendar days after receipt.<PRTPAGE P="147"/> </P> <P>(ii) For PLP lenders, if this time frame is not met, the proposed guaranteed loan will automatically be approved, subject to funding, and receive an 80 or 95 percent guarantee, as appropriate.</P> <P>(3) Complete applications. For purposes of determining the application processing timeframes, an application will be not be considered complete until all information required to make an approval decision, including the information for an environmental review, is received by the Agency.</P> <P>(4) The Agency will confirm the date an application is received with a written notification to the lender.</P> <P>(b) <E T="03">Funding preference.</E> Loans are approved subject to the availability of funding. When it appears that there are not adequate funds to meet the needs of all approved loan applicants, applications that have been approved will be placed on a preference list according to the date of receipt of a complete application. If approved applications have been received on the same day, the following will be given priority:</P> <P>(1) An application from a veteran</P> <P>(2) An application from an Agency direct loan borrower</P> <P>(3) An application from a loan applicant who:</P> <P>(i) Has a dependent family,</P> <P>(ii) Is an owner of livestock and farm implements necessary to successfully carry out farming operations, or</P> <P>(iii) Is able to make down payments.</P> <P>(4) Any other approved application.</P> <P>(c) <E T="03">Conditional commitment.</E> (1) The lender must meet all of the conditions specified in the conditional commitment to secure final Agency approval of the guarantee.</P> <P>(2) The lender, after reviewing the conditions listed on the conditional commitment, will complete, execute, and return the form to the Agency. If the conditions are not acceptable to the lender, the Agency may agree to alternatives or inform the lender and the loan applicant of their appeal rights.</P> <P>(d) <E T="03">Lender requirements prior to issuing the guarantee.</E> (1) Lender certification. The lender will certify as to the following on the appropriate Agency form:</P> <P>(i) No major changes have been made in the lender's loan or line of credit conditions and requirements since submission of the application (except those approved in the interim by the Agency in writing);</P> <P>(ii) Required hazard, flood, crop, worker's compensation, and personal life insurance (when required) are in effect;</P> <P>(iii) Truth in lending requirements have been met;</P> <P>(iv) All equal employment and equal credit opportunity and nondiscrimination requirements have been or will be met at the appropriate time;</P> <P>(v) The loan or line of credit has been properly closed, and the required security instruments have been obtained, or will be obtained, on any acquired property that cannot be covered initially under State law;</P> <P>(vi) The borrower has marketable title to the collateral owned by the borrower, subject to the instrument securing the loan or line of credit to be guaranteed and subject to any other exceptions approved in writing by the Agency. When required, an assignment on all USDA crop and livestock program payments has been obtained;</P> <P>(vii) When required, personal, joint operation, partnership, or corporate guarantees have been obtained;</P> <P>(viii) Liens have been perfected and priorities are consistent with requirements of the conditional commitment;</P> <P>(ix) Loan proceeds have been, or will be disbursed for purposes and in amounts consistent with the conditional commitment and as specified on the loan application. In line of credit cases, if any advances have occurred, advances have been disbursed for purposes and in amounts consistent with the conditional commitment and line of credit agreements;</P> <P>(x) There has been no material adverse change in the borrower's condition, financial or otherwise, since submission of the application; and</P> <P>(xi) All other requirements specified in the conditional commitment have been met.</P> <P>(2) Inspections. The lender must notify the Agency of any scheduled inspections during construction and after the guarantee has been issued. The Agency may attend these field inspections. Any inspections or review performed by the Agency, including those <PRTPAGE P="148"/>with the lender, are solely for the benefit of the Agency. Agency inspections do not relieve any other parties of their inspection responsibilities, nor can these parties rely on Agency inspections for any purpose.</P> <P>(3) Execution of lender's agreement. The lender must execute the Agency's lender's agreement and deliver it to the Agency.</P> <P>(4) Closing report and guarantee fees.</P> <P>(i) The lender must complete an Agency closing report form and return it to the Agency along with any guarantee fees.</P> <P>(ii) Guarantee fees are 1 percent and are calculated as follows: Fee=Loan Amount×% Guaranteed×.01. The nonrefundable fee is paid to the Agency by the lender. The fee may be passed on to the borrower and included in loan funds.</P> <P>(iii) The following guaranteed loan transactions are not charged a fee:</P> <P>(A) Loans involving interest assistance;</P> <P>(B) Loans where a majority of the funds are used to refinance an Agency direct loan; and</P> <P>(C) Loans to beginning farmers or ranchers involved in the direct beginning farmer downpayment program.</P> <P>(e) <E T="03">Promissory notes, line of credit agreements, mortgages, and security agreements.</E> The lender will use its own promissory notes, line of credit agreements, real estate mortgages (including deeds of trust and similar instruments), and security agreements (including chattel mortgages in Louisiana and Puerto Rico), provided:</P> <P>(1) The forms meet Agency requirements;</P> <P>(2) Documents comply with State law and regulation;</P> <P>(3) The principal and interest repayment schedules are stated clearly in the notes and are consistent with the conditional commitment;</P> <P>(4) The note is executed by the individual liable for the loan. For entities, the note is executed by the member who is authorized to sign for the entity, and by all members of the entity as individuals. Individual liability can be waived by the Agency for members holding less than 10 percent ownership in the entity if the collectability of the loan will not be impaired; and</P> <P>(5) When the loan purpose is to refinance or restructure the lender's own debt, the lender may continue to use the existing debt instrument and attach an allonge that modifies the terms of the original note.</P> <P>(f) <E T="03">Replacement of loan guarantee, or assignment guarantee agreement.</E> If the guarantee or assignment guarantee agreements are lost, stolen, destroyed, mutilated, or defaced, except where the evidence of debt was or is a bearer instrument, the Agency will issue a replacement to the lender or holder upon receipt of acceptable documentation including a certificate of loss and an indemnity bond.</P> <EAR>§ 762.140</EAR> </SECTION> <SECTION> <SECTNO>§§ 762.131-762.139</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 762.140</SECTNO> <SUBJECT>General servicing responsibilities.</SUBJECT> <P>(a) <E T="03">General.</E> (1) Lenders are responsible for servicing the entire loan in a reasonable and prudent manner, protecting and accounting for the collateral, and remaining the mortgagee or secured party of record.</P> <P>(2) The lender cannot enforce the guarantee to the extent that a loss results from a violation of usury laws or negligent servicing.</P> <P>(b) <E T="03">Borrower supervision.</E> The lender's responsibilities regarding borrower supervision include, but are not limited to the following:</P> <P>(1) Ensuring loan funds are not used for unauthorized purposes.</P> <P>(2) Ensuring borrower compliance with the covenants and provisions contained in the promissory note, loan agreement, mortgage, security instruments, any other agreements, and this part. Any violations which indicate non-compliance on the part of the borrower must be reported, in writing, to both the Agency and the borrower.</P> <P>(3) Ensuring the borrower is in compliance with all laws and regulations applicable to the loan, the collateral, and the operations of the farm.</P> <P>(4) Receiving all payments of principal and interest on the loan as they fall due and promptly disbursing to any holder its pro-rata share according to the amount of interest the holder has in the loan, less only the lender's servicing fee.<PRTPAGE P="149"/> </P> <P>(5) Performing an annual analysis of the borrower's financial condition to determine the borrower's progress. The annual analysis will include:</P> <P>(i) For loans secured by real estate only, the analysis for standard eligible lenders must include an analysis of the borrower's balance sheet. CLP lenders will determine the need for the annual analysis based on the financial strength of the borrower and document the file accordingly. PLP lenders will perform an annual analysis in accordance with the requirements established in the lender's agreement.</P> <P>(ii) For loans secured by chattels, all lenders will review the borrower's progress regarding business goals, trends and changes in financial performance, and compare actual to planned income and expenses for the past year.</P> <P>(iii) An account of the whereabouts or disposition of all collateral.</P> <P>(iv) A discussion of any observations about the farm business with the borrower.</P> <P>(c) <E T="03">Monitoring of development.</E> The lender's responsibilities regarding the construction, repairs, or other development include, but are not limited to:</P> <P>(1) Determining that all construction is completed as proposed in the loan application;</P> <P>(2) Making periodic inspections during construction to ensure that any development is properly completed within a reasonable period of time; and</P> <P>(3) Verification that the security is free of any mechanic's, materialmen's, or other liens which would affect the lender's lien or result in a different lien priority from that proposed in the request for guarantee.</P> <P>(d) <E T="03">Loan installments.</E> When a lender receives a payment from the sale of encumbered property, loan installments will be paid in the order of lien priority. When a payment is received from the sale of unencumbered property or other sources of income, loan installments will be paid in order of their due date. Agency approval is required for any other proposed payment plans.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 69 FR 44579, July 27, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.141</SECTNO> <SUBJECT>Reporting requirements.</SUBJECT> <P>Lenders are responsible for providing the local Agency credit officer with all of the following information on the loan and the borrower:</P> <P>(a) When the guaranteed loan becomes 30 days past due, and following the lender's meeting or attempts to meet with the borrower, all lenders will submit the appropriate Agency form showing guaranteed loan borrower default status. The form will be resubmitted every 60 days until the default is cured either through restructuring or liquidation.</P> <P>(b) All lenders will submit the appropriate guaranteed loan status reports as of March 31 and September 30 of each year;</P> <P>(c) CLP lenders also must provide the following:</P> <P>(1) A written summary of the lender's annual analysis of the borrower's operation. This summary should describe the borrower's progress and prospects for the upcoming operating cycle. This annual analysis may be waived or postponed if the borrower is financially strong. The summary will include a description of the reasons an analysis was not necessary.</P> <P>(2) For lines of credit, an annual certification stating that a cash flow projecting at least a feasible plan has been developed, that the borrower is in compliance with the provisions of the line of credit agreement, and that the previous year income and loan funds and security proceeds have been accounted for.</P> <P>(d) In addition to the requirements of paragraphs (a), (b), and (c) of this section, the standard eligible lender also will provide:</P> <P>(1) Borrower's balance sheet, and income and expense statement for the previous year.</P> <P>(2) For lines of credit, the cash flow for the borrower's operation that projects a feasible plan or better for the upcoming operating cycle. The standard eligible lender must receive approval from the Agency before advancing future years' funds.</P> <P>(3) An annual farm visit report or collateral inspection.</P> <P>(e) PLP lenders will submit additional reports as required in their lender's agreement.<PRTPAGE P="150"/> </P> <P>(f) A lender receiving a final loss payment must complete and return an annual report on its collection activities for each unsatisfied account for 3 years following payment of the final loss claim.</P> </SECTION> <SECTION> <SECTNO>§ 762.142</SECTNO> <SUBJECT>Servicing related to collateral.</SUBJECT> <P>(a) <E T="03">General.</E> The lender's responsibilities regarding servicing collateral include, but are not limited to, the following:</P> <P>(1) Obtain income and insurance assignments when required.</P> <P>(2) Ensure the borrower has or obtains marketable title to the collateral.</P> <P>(3) Inspect the collateral as often as deemed necessary to properly service the loan.</P> <P>(4) Ensure the borrower does not convert loan security.</P> <P>(5) Ensure the proceeds from the sale or other disposition of collateral are accounted for and applied in accordance with the lien priorities on which the guarantee is based or used for the purchase of replacement collateral.</P> <P>(6) Ensure the loan and the collateral are protected in the event of foreclosure, bankruptcy, receivership, insolvency, condemnation, or other litigation.</P> <P>(7) Ensure taxes, assessments, or ground rents against or affecting the collateral are paid.</P> <P>(8) Ensure adequate insurance is maintained.</P> <P>(9) Ensure that insurance loss payments, condemnation awards, or similar proceeds are applied on debts in accordance with lien priorities on which the guarantee was based, or used to rebuild or acquire needed replacement collateral.</P> <P>(b) <E T="03">Partial releases.</E> (1) A lender may release guaranteed loan security without FSA concurrence as follows:</P> <P>(i) When the security item is being sold for market value and the proceeds will be applied to the loan in accordance with lien priorities. In the case of term loans, proceeds will be applied as extra payments and not as a regular installment on the loan.</P> <P>(ii) The security item will be used as a trade-in or source of down payment funds for a like item that will be taken as security.</P> <P>(iii) The security item has no present or prospective value.</P> <P>(2) A partial release of security may be approved in writing by the Agency upon the lender's request when:</P> <P>(i) Proceeds will be used to make improvements to real estate that increase the value of the security by an amount equal to or greater than the value of the security being released.</P> <P>(ii) Security will be released outright with no consideration, but the total unpaid balance of the guaranteed loan is less than or equal to 75 percent of the value of the security for the loan after the release, excluding the value of growing crops or planned production, based on a current appraisal of the security.</P> <P>(iii) Significant income generating property will not be released unless it is being replaced and business assets will not be released for use as a gift or any similar purpose.</P> <P>(iv) Agency concurrence is provided in writing to the lender's written request. Standard eligible lenders and CLP lenders will submit the following to the Agency:</P> <P>(A) A current balance sheet on the borrower; and</P> <P>(B) A current appraisal of the security. Based on the level of risk and estimated equity involved, the Agency will determine what security needs to be appraised. Any required security appraisals must meet the requirements of § 762.127; and</P> <P>(C) A description of the purpose of the release; and</P> <P>(D) Any other information requested by the Agency to evaluate the proposed servicing action.</P> <P>(3) The lender will provide the Agency copies of any agreements executed to carry out the servicing action.</P> <P>(4) PLP lenders will request servicing approval in accordance with their agreement with the Agency at the time of PLP status certification.</P> <P>(c) <E T="03">Subordinations.</E> (1) The Agency may subordinate its security interest on a direct loan when a guaranteed loan is being made if the requirements of the regulations governing Agency direct loan subordinations are met and only in the following circumstances:<PRTPAGE P="151"/> </P> <P>(i) To permit a guaranteed lender to advance funds and perfect a security interest in crops, feeder livestock, livestock offspring, or livestock products;</P> <P>(ii) When the lender requesting the guarantee needs the subordination of the Agency's lien position to maintain its lien position when servicing or restructuring;</P> <P>(iii) When the lender requesting the guarantee is refinancing the debt of another lender and the Agency's position on real estate security will not be adversely affected; or</P> <P>(iv) To permit a line of credit to be advanced for annual operating expenses.</P> <P>(2) The Agency may subordinate its basic security in a direct loan to permit guaranteed line of credit only when both of the following additional conditions are met:</P> <P>(i) The total unpaid balance of the direct loans is less than or equal to 75 percent of the value of all of the security for the direct loans, excluding the value of growing crops or planned production, at the time of the subordination. The direct loan security value will be determined by an appraisal. The lender requesting the subordination and guarantee is responsible for providing the appraisal and may charge the applicant a reasonable appraisal fee.</P> <P>(ii) The applicant cannot obtain sufficient credit through a conventional guaranteed loan without a subordination.</P> <P>(3) The lender may not subordinate its interest in property which secures a guaranteed loan except as follows:</P> <P>(i) The lender may subordinate its security interest in crops, feeder livestock, livestock offspring, or livestock products when no funds have been advanced from the guaranteed loan for their production, so a lender can make a loan for annual production expenses; or</P> <P>(ii) The lender may, with written Agency approval, subordinate its interest in basic security in cases where the subordination is required to allow another lender to refinance an existing prior lien, no additional debt is being incurred, and the lender's security position will not be adversely affected by the subordination.</P> <P>(iii) The Agency's national office may provide an exception to the subordination prohibition if such action is in the Agency's best interest. However, in no case can the loan made under the subordination include tax exempt financing.</P> <P>(d) <E T="03">Transfer and assumption.</E> Transfers and assumptions are subject to the following conditions:</P> <P>(1) For standard eligible and CLP lenders, the servicing action must be approved by the Agency in writing.</P> <P>(2) For standard eligible and CLP lenders, the transferee must apply for a loan in accordance with § 762.110, including a current appraisal, unless the lien position of the guaranteed loan will not change, and any other information requested by the Agency to evaluate the transfer and assumption.</P> <P>(3) PLP lenders may process transfers and assumptions in accordance with their agreement with the Agency.</P> <P>(4) Any required security appraisals must meet the requirements of § 762.127.</P> <P>(5) The Agency will review, approve or reject the request in accordance with the time frames in § 762.130.</P> <P>(6) The transferee must meet the eligibility requirements and loan limitations for the loan being transferred, all requirements relating to loan rates and terms, loan security, feasibility, and environmental and other laws applicable to a loan applicant under this part.</P> <P>(7) The lender will use its own assumption agreements or conveyance instruments, providing they are legally sufficient to obligate the transferee for the total outstanding debt. The lender will provide the Agency copies of any agreements executed to carry out the servicing action.</P> <P>(8) The Agency approves the transfer and assumption by executing a modification of the guarantee to designate the party that assumed the guaranteed debt, the amount of debt at the time of the assumption, including interest that is being capitalized, and any new loan terms, if applicable.</P> <P>(9) The lender must give any holder notice of the transfer. If the rate and terms are changed, written concurrence from the holder is required.</P> <P>(10) The Agency will agree to releasing the transferor or any guarantor <PRTPAGE P="152"/>from liability only if the requirements of § 762.146(c) are met.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001; 69 FR 44579, July 27, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.143</SECTNO> <SUBJECT>Servicing distressed accounts.</SUBJECT> <P>(a) A borrower is in default when 30 days past due on a payment or in violation of provisions of the loan documents.</P> <P>(b) In the event of a borrower default, SEL and CLP lenders will:</P> <P>(1) Report to the Agency in accordance with § 762.141.</P> <P>(2) Determine whether it will repurchase the guaranteed portion from the holder in accordance with § 762.144, if the guaranteed portion of the loan was sold on the secondary market.</P> <P>(3) Arrange a meeting with the borrower within 15 days of default (45 days after payment due date for monetary defaults) to identify the nature of the delinquency and develop a course of action that will eliminate the delinquency and correct the underlying problems. Non-monetary defaults will be handled in accordance with the lender's note, loan agreements and any other applicable loan documents.</P> <P>(i) The lender and borrower will prepare a current balance sheet and cash flow projection in preparation for the meeting. If the borrower refuses to cooperate, the lender will compile the best financial information available.</P> <P>(ii) The lender or the borrower may request the attendance of an Agency credit officer. If requested, the Agency credit officer will assist in developing solutions to the borrower's financial problems.</P> <P>(iii) The lender will summarize the meeting and proposed solutions on the Agency form for guaranteed loan borrower default status completed after the meeting. The lender will indicate the results on this form for the lender's consideration of the borrower for interest assistance in conjunction with rescheduling under § 762.145(b).</P> <P>(iv) The lender must decide whether to restructure or liquidate the account within 90 days of default, unless the lender can document circumstances that justify an extension by the Agency.</P> <P>(v) The lender may not initiate foreclosure action on the loan until 60 days after eligibility of the borrower to participate in the interest assistance programs has been determined by the Agency. If the lender or the borrower does not wish to consider servicing options under this section, this should be documented, and liquidation under § 762.149 should begin.</P> <P>(vi) If a borrower is current on a loan, but will be unable to make a payment, a restructuring proposal may be submitted in accordance with § 762.145 prior to the payment coming due.</P> <P>(c) PLP lenders will service defaulted loans according to their lender's agreement.</P> </SECTION> <SECTION> <SECTNO>§ 762.144</SECTNO> <SUBJECT>Repurchase of guaranteed portion from a secondary market holder.</SUBJECT> <P>(a) <E T="03">Request for repurchase.</E> The holder may request the lender to repurchase the unpaid guaranteed portion of the loan when:</P> <P>(1) The borrower has not made a payment of principal and interest due on the loan for at least 60 days; or</P> <P>(2) The lender has failed to remit to the holder its pro-rata share of any payment made by the borrower within 30 days of receipt of a payment.</P> <P>(b) <E T="03">Repurchase by the lender.</E> (1) When a lender is requested to repurchase a loan from the holder, the lender must consider the request according to the servicing actions that are necessary on the loan. In order to facilitate servicing and simplified accounting of loan transactions, lenders are encouraged to repurchase the loan upon the holder's request.</P> <P>(2) The repurchase by the lender will be for an amount equal to the portion of the loan held by the holder plus accrued interest.</P> <P>(3) The guarantee will not cover separate servicing fees that the lender accrues after the repurchase.</P> <P>(c) <E T="03">Repurchase by the Agency.</E> (1) If the lender does not repurchase the loan, the holder must inform the Agency in writing that demand was made on the lender and the lender refused. Following the lender's refusal, the holder may continue as holder of the guaranteed portion of the loan or request that the Agency purchase the guaranteed <PRTPAGE P="153"/>portion. Within 30 days after written demand to the Agency from the holder with required attachments, the Agency will forward to the holder payment of the unpaid principal balance, with accrued interest to the date of repurchase. If the holder does not desire repurchase or purchase of a defaulted loan, the lender must forward the holder its pro-rata share of payments, liquidation proceeds and Agency loss payments.</P> <P>(2) With its demand on the Agency, the holder must include:</P> <P>(i) A copy of the written demand made upon the lender.</P> <P>(ii) Originals of the guarantee and note properly endorsed to the Agency, or the original of the assignment of guarantee.</P> <P>(iii) A copy of any written response to the demand of the holder by the lender.</P> <P>(iv) An account to which the Agency can forward the purchase amount via electronic funds transfer.</P> <P>(3) The amount due the holder from the Agency includes unpaid principal, unpaid interest to the date of demand, and interest which has accrued from the date of demand to the proposed payment date.</P> <P>(i) Upon request by the Agency, the lender must furnish upon Agency request a current statement, certified by a bank officer, of the unpaid principal and interest owed by the borrower and the amount due the holder.</P> <P>(ii) Any discrepancy between the amount claimed by the holder and the information submitted by the lender must be resolved by the lender and the holder before payment will be approved by the Agency. The Agency will not participate in resolution of any such discrepancy. When there is a discrepancy, the 30 day Agency payment requirement to the holder will be suspended until the discrepancy is resolved.</P> <P>(iii) In the case of a request for Agency purchase, the Agency will only pay interest that accrues for up to 90 days from the date of the demand letter to the lender requesting the repurchase. However, if the holder requested repurchase from the Agency within 60 days of the request to the lender and for any reason not attributable to the holder and the lender, the Agency cannot make payment within 30 days of the holder's demand to the Agency, the holder will be entitled to interest to the date of payment.</P> <P>(4) At the time of purchase by the Agency, the original assignment of guarantee will be assigned by the holder to the Agency without recourse, including all rights, title, and interest in the loan.</P> <P>(5) Purchase by the Agency does not change, alter, or modify any of the lender's obligations to the Agency specified in the lender's agreement or guarantee; nor does the purchase waive any of the Agency's rights against the lender.</P> <P>(6) The Agency succeeds to all rights of the holder under the Guarantee including the right of set-off against the lender.</P> <P>(7) Within 180 days of the Agency's purchase, the lender will reimburse the Agency the amount of repurchase, with accrued interest, through one of the following ways:</P> <P>(i) By liquidating the loan security and paying the Agency its pro-rata share of liquidation proceeds; or</P> <P>(ii) Paying the Agency the full amount the Agency paid to the holder plus any accrued interest.</P> <P>(8) The lender will be liable for the purchase amount and any expenses incurred by the Agency to maintain the loan in its portfolio or liquidate the security. While the Agency holds the guaranteed portion of the loan, the lender will transmit to the Agency any payment received from the borrower, including the pro-rata share of liquidation or other proceeds.</P> <P>(9) If the borrower files for reorganization under the provisions of the bankruptcy code or pays the account current while the purchase by the Government is being processed, the Agency may hold the loan as long it determines this action to be in the Agency's interest. If the lender is not proceeding expeditiously to collect the loan or reimbursement is not waived under this paragraph, the Agency will demand payment by the lender and collect the purchase amount through administrative offset of any claims due the lender.</P> <P>(10) The Agency may sell a purchased guaranteed loan on a non-recourse <PRTPAGE P="154"/>basis if it determines that selling the portion of the loan that it holds is in the Government's best interest. A non-recourse purchase from the Agency requires a written request to the Agency from the party that wishes to purchase it, and written concurrence from the lender;</P> <P>(d) <E T="03">Repurchase for servicing.</E> (1) If, due to loan default or imminent loan restructuring, the lender determines that repurchase is necessary to adequately service the loan, the lender may repurchase the guaranteed portion of the loan from the holder, with the written approval of the Agency.</P> <P>(2) The lender will not repurchase from the holder for arbitrage purposes. With its request for Agency concurrence, the lender will notify the Agency of its plans to resell the guaranteed portion following servicing.</P> <P>(3) The holder will sell the guaranteed portion of the loan to the lender for an amount agreed to between the lender and holder.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 69 FR 44579, July 27, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.145</SECTNO> <SUBJECT>Restructuring guaranteed loans.</SUBJECT> <P>(a) <E T="03">General.</E> (1) To restructure guaranteed loans standard eligible lenders must:</P> <P>(i) Obtain prior written approval of the Agency for all restructuring actions; and,</P> <P>(ii) Provide the items in paragraph (b) and (e) of this section to the Agency for approval.</P> <P>(2) If the standard eligible lender's proposal for servicing is not agreed to by the Agency, the Agency approval official will notify the lender in writing within 14 days of the lender's request.</P> <P>(3) To restructure guaranteed loans CLP lenders must:</P> <P>(i) Obtain prior written approval of the Agency only for debt write down under this section.</P> <P>(ii) Submit all calculations required in paragraph (e) of this section for debt writedown.</P> <P>(iii) For restructuring other than write down, provide FSA with a certification that each requirement of this section has been met, a narrative outlining the circumstances surrounding the need for restructuring, and copies of any applicable calculations.</P> <P>(4) PLP lenders will restructure loans in accordance with their lender's agreement.</P> <P>(5) All lenders will submit copies of any restructured notes or lines of credit to the Agency.</P> <P>(b) <E T="03">Requirements.</E> For any restructuring action, the following conditions apply:</P> <P>(1) The borrower meets the eligibility criteria of § 762.120, except the provisions regarding prior debt forgiveness and delinquency on a federal debt do not apply.</P> <P>(2) The borrower's ability to make the amended payment is documented by the following:</P> <P>(i) A feasible plan (see § 762.102(b)). If interest assistance is required to achieve a feasible plan, the items required by § 762.150(d) must be submitted with a restructuring request. Feasible plan is defined in § 762.102(b).</P> <P>(ii) Current financial statements from all liable parties.</P> <P>(iii) Verification of nonfarm income.</P> <P>(iv) Verification of all debts of $1,000 or more.</P> <P>(v) Applicable credit reports.</P> <P>(vi) Financial history (and production history for standard eligible lenders) for the past 3 years to support the cash flow projections.</P> <P>(3) A final loss claim may be reduced, adjusted, or rejected as a result of negligent servicing after the concurrence with a restructuring action under this section.</P> <P>(4) Loans secured by real estate and/or equipment can be restructured using a balloon payment, equal installments, or unequal installments. Under no circumstances may livestock or crops alone be used as security for a loan to be rescheduled using a balloon payment. If a balloon payment is used, the projected value of the real estate and/or equipment security must indicate that the loan will be fully secured when the balloon payment becomes due. The projected value will be derived from a current appraisal adjusted for depreciation of depreciable property, such as buildings and other improvements, that occurs until the balloon payment is due. For equipment security, a current appraisal is required. <PRTPAGE P="155"/>The lender is required to project the security value of the equipment at the time the balloon payment is due based on the remaining life of the equipment, or the depreciation schedule on the borrower's Federal income tax return. Loans restructured with a balloon payment that are secured by real estate will have a minimum term of 5 years, and other loans will have a minimum term of 3 years before the scheduled balloon payment. If statutory limits on terms of loans prevent the minimum terms, balloon payments may not be used. If the loan is rescheduled with unequal installments, a feasible plan, as defined in § 762.102(b), must be projected for when installments are scheduled to increase.</P> <P>(5) If a borrower is current on a loan, but will be unable to make a payment, a restructuring proposal may be submitted prior to the payment coming due.</P> <P>(6) The lender may capitalize the outstanding interest when restructuring the loan as follows:</P> <P>(i) As a result of the capitalization of interest, a rescheduled promissory note may increase the amount of principal the borrower is required to pay. However, in no case will such principal amount exceed the statutory loan limits contained in § 761.8 of this chapter.</P> <P>(ii) When accrued interest causes the loan amount to exceed the statutory loan limits, rescheduling may be approved without capitalization of the amount that exceeds the limit. Noncapitalized interest may be scheduled for repayment over the term of the rescheduled note.</P> <P>(iii) Only interest that has accrued at the rate indicated on the borrower's original promissory notes may be capitalized. Late payment fees or default interest penalties that have accrued due to the borrower's failure to make payments as agreed are not covered under the guarantee and may not be capitalized.</P> <P>(iv) The Agency will execute a modification of guarantee form to identify the new loan principal and the guaranteed portion if greater than the original loan amounts, and to waive the restriction on capitalization of interest, if applicable, to the existing guarantee documents. The modification form will be attached to the original guarantee as an addendum.</P> <P>(v) Approved capitalized interest will be treated as part of the principal and interest that accrues thereon, in the event that a loss should occur.</P> <P>(7) The lender's security position will not be adversely affected because of the restructuring. New security instruments may be taken if needed, but a loan does not have to be fully secured in order to be restructured, unless it is restructured with a balloon payment. When a loan is restructured using a balloon payment the lender must take a lien on all assets and project the loan to be fully secured at the time the balloon payment becomes due, in accordance with paragraph (b)(4) of this section.</P> <P>(8) Any holder agrees in writing to any changes in the original loan terms, including the approval of interest assistance. If the holder does not agree, the lender must repurchase the loan from the holder for any loan restructuring to occur.</P> <P>(9) After a guaranteed loan is restructured, the lender must provide the Agency with a copy of the restructured promissory note.</P> <P>(c) <E T="03">Rescheduling.</E> The following conditions apply when a guaranteed loan is rescheduled or reamortized:</P> <P>(1) Payments will be rescheduled within the following terms:</P> <P>(i) FO and existing SW may be amortized over the remaining term of the note or rescheduled with an uneven payment schedule. The maturity date cannot exceed 40 years from the date of the original note.</P> <P>(ii) OL notes must be rescheduled over a period not to exceed 15 years from the date of the rescheduling. An OL line of credit may be rescheduled over a period not to exceed 7 years from the date of the rescheduling or 10 years from the date of the original note, whichever is less. Advances cannot be made against a line of credit loan that has had any portion of the loan rescheduled.</P> <P>(2) The interest rate for a rescheduled loan is the negotiated rate agreed upon by the lender and the borrower at the time of the action, subject to the loan limitations for each type of loan.<PRTPAGE P="156"/> </P> <P>(3) A new note is not necessary when rescheduling occurs. However, if a new note is not taken, the existing note or line of credit agreement must be modified by attaching an allonge or other legally effective amendment, evidencing the revised repayment schedule and any interest rate change. If a new note is taken, the new note must reference the old note and state that the indebtedness evidenced by the old note or line of credit agreement is not satisfied. The original note or line of credit agreement must be retained.</P> <P>(d) <E T="03">Deferrals.</E> The following conditions apply to deferrals:</P> <P>(1) Payments may be deferred up to 5 years, but the loan may not be extended beyond the final due date of the note.</P> <P>(2) The principal portion of the payment may be deferred either in whole or in part.</P> <P>(3) Interest may be deferred only in part. Payment of a reasonable portion of accruing interest as indicated by the borrower's cash flow projections is required for multi-year deferrals.</P> <P>(4) There must be a reasonable prospect that the borrower will be able to resume full payments at the end of the deferral period.</P> <P>(e) <E T="03">Debt writedown.</E> The following conditions apply to debt writedown:</P> <P>(1) A lender may only write down a delinquent guaranteed loan or line of credit in an amount sufficient to permit the borrower to develop a feasible plan as defined in § 762.102(b).</P> <P>(2) The lender will request other creditors to negotiate their debts before a writedown is considered.</P> <P>(3) The borrower cannot develop a feasible plan after consideration is given to rescheduling and deferral under this section.</P> <P>(4) The present value of the loan to be written down, based on the interest rate of the rescheduled loan, will be equal to or exceed the net recovery value of the loan collateral.</P> <P>(5) The loan will be restructured with regular payments at terms no shorter than 5 years for a line of credit and OL note and no shorter than 20 years for FO, unless required to be shorter by § 762.145(c)(1)(i) and (ii).</P> <P>(6) No further advances may be made on a line of credit that is written down.</P> <P>(7) Loans may not be written down with interest assistance. If a borrower's loan presently on interest assistance requires a writedown, the writedown will be considered without interest assistance.</P> <P>(8) The writedown is based on writing down the shorter-term loans first.</P> <P>(9) When a lender requests approval of a writedown for a borrower with multiple loans, the security for all of the loans will be cross-collateralized and continue to serve as security for the loan that is written down. If a borrower has multiple loans and one loan is written off entirely through debt writedown, the security for that loan will not be released and will remain as security for the other written down debt. Additional security instruments will be taken if required to cross-collateralize security and maintain lien priority.</P> <P>(10) The writedown will be evidenced by an allonge or amendment to the existing note or line of credit reflecting the writedown.</P> <P>(11) The borrower executes an Agency shared appreciation agreement for loans which are written down and secured by real estate.</P> <P>(i) The lender will attach the original agreement to the restructured loan document.</P> <P>(ii) The lender will provide the Agency a copy of the executed agreement, and</P> <P>(iii) Security instruments must ensure future collection of any appreciation under the agreement.</P> <P>(12) The lender will prepare and submit the following to the Agency:</P> <P>(i) A current appraisal of all security in accordance with § 762.127.</P> <P>(ii) A completed report of loss on the appropriate Agency form for the proposed writedown loss claim.</P> <P>(iii) Detailed writedown calculations as follows:</P> <P>(A) Calculate the present value.</P> <P>(B) Determine the net recovery value.</P> <P>(C) If the net recovery value exceeds the present value, writedown is unavailable; liquidation becomes the next servicing consideration. If the present value equals or exceeds the net recovery value, the debt may be written down to the present value.<PRTPAGE P="157"/> </P> <P>(iv) The lender will make any adjustment in the calculations as requested by the Agency.</P> <CITA>[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999, as amended at 66 FR 7567, Jan. 24, 2001; 69 FR 44579, July 27, 2004; 70 FR 56107, Sept. 26, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.146</SECTNO> <SUBJECT>Other servicing procedures.</SUBJECT> <P>(a) <E T="03">Additional loans and advances.</E> (1) Notwithstanding any provision of this section, the PLP lender may make additional loans or advances in accordance with the lender's agreement with the Agency.</P> <P>(2) SEL and CLP lenders must not make additional loans or advances without prior written approval of the Agency, except as provided in the borrower's loan or line of credit agreement.</P> <P>(3) In cases of a guaranteed line of credit, lenders may make an emergency advance when a line of credit has reached its ceiling. The emergency advance will be made as an advance under the line and not as a separate note. The lender's loan documents must contain sufficient language to provide that any emergency advance will constitute a debt of the borrower to the lender and be secured by the security instrument. The following conditions apply:</P> <P>(i) The loan funds to be advanced are for authorized operating loan purposes;</P> <P>(ii) The financial benefit to the lender and the Government from the advance will exceed the amount of the advance; and</P> <P>(iii) The loss of crops or livestock is imminent unless the advance is made.</P> <P>(4) Protective advance requirements are found in § 762.149.</P> <P>(b) <E T="03">Release of liability upon withdrawal.</E> An individual who is obligated on a guaranteed loan may be released from liability by a lender, with the written consent of the Agency, provided the following conditions have been met:</P> <P>(1) The individual to be released has withdrawn from the farming or ranching operation;</P> <P>(2) A divorce decree or final property settlement does not hold the withdrawing party responsible for the loan payments;</P> <P>(3) The withdrawing party's interest in the security is conveyed to the individual or entity with whom the loan will be continued;</P> <P>(4) The ratio of the amount of debt to the value of the remaining security is less than or equal to .75, or the withdrawing party has no income or assets from which collection can be made; and</P> <P>(5) Withdrawal of the individual does not result in legal dissolution of the entity to which the loans are made. Individually liable members of a general or limited partnership may not be released from liability.</P> <P>(6) The remaining liable party projects a feasible plan (see § 762.102(b)).</P> <P>(c) <E T="03">Release of liability after liquidation.</E> After a final loss claim has been paid on the borrower's account, the lender may release the borrower or guarantor from liability if;</P> <P>(1) The Agency agrees to the release in writing;</P> <P>(2) The lender documents its consideration of the following factors concerning the borrower or guarantors:</P> <P>(i) The likelihood that the borrower or guarantor will have a sufficient level of income in the reasonably near future to contribute to a meaningful reduction of the debt;</P> <P>(ii) The prospect that the borrower or guarantor will inherit assets in the near term that may be attached by the Agency for payment of a significant portion of the debt;</P> <P>(iii) Whether collateral has been properly accounted for, and whether liability should be retained in order to take action against the borrower or a third party for conversion of security;</P> <P>(iv) The availability of other income or assets which are not security;</P> <P>(v) The possibility that assets have been concealed or improperly transferred;</P> <P>(vi) The effect of other guarantors on the loan; and</P> <P>(vii) Cash consideration or other collateral in exchange for the release of liability.</P> <P>(3) The lender will use its own release of liability documents.</P> <P>(d) <E T="03">Interest rate changes.</E> (1) The lender may change the interest rate on a performing (nondelinquent) loan only with the borrower's consent.<PRTPAGE P="158"/> </P> <P>(2) If the loan has been sold on the secondary market, the lender must repurchase the loan or obtain the holder's written consent.</P> <P>(3) To change a fixed rate of interest to a variable rate of interest or vice versa, the lender and the borrower must execute a legally effective allonge or amendment to the existing note.</P> <P>(4) If a new note is taken, it will be attached to and refer to the original note.</P> <P>(5) The lender will inform the Agency of the rate change.</P> <P>(e) <E T="03">Consolidation.</E> Two or more Agency guaranteed loans may be consolidated, subject to the following conditions:</P> <P>(1) The borrower must project a feasible plan after the consolidation. See § 762.102(b) for definition of feasible plan.</P> <P>(2) Only OL may be consolidated.</P> <P>(3) Existing lines of credit may only be consolidated with a new line of credit if the final maturity date and conditions for advances of the new line of credit are made the same as the existing line of credit.</P> <P>(4) Guaranteed OL may not be consolidated with a line of credit, even if the line of credit has been rescheduled.</P> <P>(5) Guaranteed loans made prior to October 1, 1991, cannot be consolidated with those loans made on or after October 1, 1991.</P> <P>(6) OL secured by real estate or with an outstanding interest assistance agreement or shared appreciation agreement cannot be consolidated.</P> <P>(7) A new note or line of credit agreement will be taken. The new note or line of credit agreement must describe the note or line of credit agreement being consolidated and must state that the indebtedness evidenced by the note or line of credit agreement is not satisfied. The original note or line of credit agreement must be retained.</P> <P>(8) The interest rate for a consolidated OL loan is the negotiated rate agreed upon by the lender and the borrower at the time of the action, subject to the loan limitations for each type of loan.</P> <P>(9) The Agency approves the consolidation by executing a modification of guarantee. The modification will indicate the consolidated loan amount, new terms, and percentage of guarantee, and will be attached to the originals of the guarantees being consolidated. If loans with a different guarantee percentage are consolidated, the new guarantee will be at the lowest percentage of guarantee being consolidated</P> <P>(10) Any holders must consent to the consolidation, or the guaranteed portion must be repurchased by the lender.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.147</SECTNO> <SUBJECT>Servicing shared appreciation agreements.</SUBJECT> <P>(a) <E T="03">Lender responsibilities.</E> The lender is responsible for:</P> <P>(1) Monitoring the borrower's compliance with the shared appreciation agreement;</P> <P>(2) Notifying the borrower of the amount of recapture due; and,</P> <P>(3) Beginning October 1, 1999, a notice of the agreement's provisions not later than 12 months before the end of the agreement; and</P> <P>(4) Reimbursing the Agency for its pro-rata share of recapture due.</P> <P>(b) <E T="03">Recapture.</E> (1) Recapture of any appreciation of real estate security will take place at the end of the term of the agreement, or sooner if the following occurs:</P> <P>(i) On the conveyance of the real estate security (or a portion thereof) by the borrower.</P> <P>(A) If only a portion of the real estate is conveyed, recapture will only be triggered against the portion conveyed. Partial releases will be handled in accordance with § 762.141(b).</P> <P>(B) Transfer of title to the spouse of the borrower on the death of such borrower will not be treated as a conveyance under the agreement.</P> <P>(ii) On repayment of the loan; or</P> <P>(iii) If the borrower ceases farming.</P> <P>(2) Calculating recapture.</P> <P>(i) The amount of recapture will be based on the difference between the value of the security at the time recapture is triggered and the value of the security at the time of writedown, as shown on the shared appreciation agreement.<PRTPAGE P="159"/> </P> <P>(ii) Security values will be determined through appraisals obtained by the lender and meeting the requirements of § 762.127.</P> <P>(iii) All appraisal fees will be paid by the lender.</P> <P>(iv) The amount of recapture will not exceed the amount of writedown shown on the shared appreciation agreement.</P> <P>(v) If recapture is triggered within 4 years of the date of the shared appreciation agreement, the lender shall recapture 75 percent of any positive appreciation in the market value of the property securing the loan or line of credit agreement.</P> <P>(vi) If recapture is triggered after 4 years from the date of the shared appreciation agreement, the lender shall recapture 50 percent of any positive appreciation in the market value of the property securing the loan or line of credit agreement.</P> <P>(3) Servicing recapture debt.</P> <P>(i) If recapture is triggered under the shared appreciation agreement and the borrower is unable to pay the recapture in a lump sum, the lender may:</P> <P>(A) Reschedule the recapture debt with the consent of the Agency, provided the lender can document the borrower's ability to make amortized payments on the recapture debt, plus pay all other obligations. In such case, the recapture debt will not be covered by the guarantee;</P> <P>(B) Pay the Agency its pro rata share of the recapture due. In such case, the recapture debt of the borrower will be covered by the guarantee; or</P> <P>(C) Service the account in accordance with § 762.149.</P> <P>(ii) If recapture is triggered, and the borrower is able but unwilling to pay the recapture in a lump sum, the lender will service the account in accordance with § 762.149.</P> <P>(4) Paying the Agency. Any shared appreciation recaptured by the lender will be shared on a pro-rata basis between the lender and the Agency.</P> </SECTION> <SECTION> <SECTNO>§ 762.148</SECTNO> <SUBJECT>Bankruptcy.</SUBJECT> <P>(a) <E T="03">Lender responsibilities.</E> The lender must protect the guaranteed loan debt and all collateral securing the loan in bankruptcy proceedings. The lender's responsibilities include, but are not limited to:</P> <P>(1) Filing a proof of claim where required and all the necessary papers and pleadings;</P> <P>(2) Attending, and where necessary, participating in meetings of the creditors and court proceedings;</P> <P>(3) Protecting the collateral securing the guaranteed loan and resisting any adverse changes that may be made to the collateral;</P> <P>(4) Seeking a dismissal of the bankruptcy proceeding when the operation as proposed by the borrower to the bankruptcy court is not feasible;</P> <P>(5) When permitted by the bankruptcy code, requesting a modification of any plan of reorganization if it appears additional recoveries are likely.</P> <P>(6) Monitor confirmed plans under chapters 11, 12 and 13 of the bankruptcy code to determine borrower compliance. If the borrower fails to comply, the lender will seek a dismissal of the reorganization plan; and</P> <P>(7) Keeping the Agency regularly informed in writing on all aspects of the proceedings.</P> <P>(i) The lender will submit a default status report when the borrower defaults and every 60 days until the default is resolved or a final loss claim is paid.</P> <P>(ii) The default status report will be used to inform the Agency of the bankruptcy filing, the reorganization plan confirmation date and effective date, when the reorganization plan is complete, and when the borrower is not in compliance with the reorganization plan.</P> <P>(b) <E T="03">Bankruptcy expenses.</E> (1) Reorganization.</P> <P>(i) Expenses, such as legal fees and the cost of appraisals incurred by the lender as a direct result of the borrower's chapter 11, 12, or 13 reorganization, are covered under the guarantee, provided they are reasonable, customary, and provide a demonstrated economic benefit to the lender and the Agency.</P> <P>(ii) Lender's in-house expenses, which are those expenses which would normally be incurred for administration of the loan, including in-house lawyers, are not covered by the guarantee.</P> <P>(2) Liquidation expenses in bankruptcy.<PRTPAGE P="160"/> </P> <P>(i) Reasonable and customary liquidation expenses may be deducted from the proceeds of the collateral in liquidation bankruptcy cases.</P> <P>(ii) In-house expenses are not considered customary liquidation expenses, may not be deducted from collateral proceeds, and are not covered by the guarantee.</P> <P>(c) <E T="03">Estimated loss claims in reorganization</E>—(1) <E T="03">At confirmation.</E> The lender may submit an estimated loss claim upon confirmation of the reorganization plan in accordance with the following:</P> <P>(i) The estimated loss payment will cover the guaranteed percentage of the principal and accrued interest written off, plus any allowable costs incurred as of the effective date of the plan.</P> <P>(ii) The lender will submit supporting documentation for the loss claim, and any additional information requested by the Agency, including justification for the legal fees included on the claim.</P> <P>(iii) The estimated loss payment may be revised as consistent with a court-approved reorganization plan.</P> <P>(iv) Protective advances made and approved in accordance with § 762.149 may be included in an estimated loss claim associated with a reorganization, if:</P> <P>(A) They were incurred in connection with the initiation of liquidation action prior to bankruptcy filing; or</P> <P>(B) The advance is required to provide repairs, insurance, etc. to protect the collateral as a result of delays in the case, or failure of the borrower to maintain the security.</P> <P>(2) Interest only losses. The lender may submit an estimated loss claim for interest only after confirmation of the reorganization plan in accordance with the following:</P> <P>(i) The loss claims may cover interest losses sustained as a result of a court-ordered, permanent interest rate reduction.</P> <P>(ii) The loss claims will be processed annually on the anniversary date of the effective date of the reorganization plan.</P> <P>(iii) If the borrower performs under the terms of the reorganization plan, annual interest reduction loss claims will be submitted on or near the same date, beyond the period of the reorganization plan.</P> <P>(3) Actual loss.</P> <P>(i) Once the reorganization plan is complete, the lender will provide the Agency with documentation of the actual loss sustained.</P> <P>(ii) If the actual loss sustained is greater than the prior estimated loss payment, the lender may submit a revised estimated loss claim to obtain payment of the additional amount owed by the Agency under the guarantee.</P> <P>(iii) If the actual loss is less than the prior estimated loss, the lender will reimburse the Agency for the overpayment plus interest at the note rate from the date of the payment of the estimated loss.</P> <P>(4) Payment to holder. In reorganization bankruptcy, if a holder makes demand upon the Agency, the Agency will pay the holder interest to the plan's effective date. Accruing interest thereafter will be based upon the provisions of the reorganization plan.</P> <P>(d) <E T="03">Liquidation under the bankruptcy code.</E> (1) Upon receipt of notification that a borrower has filed for protection under Chapter 7 of the bankruptcy code, or a liquidation plan under chapter 11, the lender must proceed according to the liquidation procedures of this part.</P> <P>(2) If the property is abandoned by the trustee, the lender will conduct the liquidation according to § 762.149.</P> <P>(3) Proceeds received from partial sale of collateral during bankruptcy may be used by the lender to pay reasonable costs, such as freight, labor and sales commissions, associated with the partial sale. Reasonable use of proceeds for this purpose must be documented with the final loss claim in accordance with § 762.149(a)(vi).</P> </SECTION> <SECTION> <SECTNO>§ 762.149</SECTNO> <SUBJECT>Liquidation.</SUBJECT> <P>(a) <E T="03">Mediation.</E> When it has been determined that default cannot be cured through any of the servicing options available, or if the lender does not wish to utilize any of the authorities provided in this part, the lender must:</P> <P>(1) Participate in mediation according to the rules and regulations of any State which has a mandatory farmer-creditor mediation program;<PRTPAGE P="161"/> </P> <P>(2) Consider private mediation services in those States which do not have a mandatory farmer-creditor mediation program; and</P> <P>(3) Not agree to any proposals to rewrite the terms of a guaranteed loan which do not comply with this part. Any agreements reached as a result of mediation involving defaults and or loan restructuring must have written concurrence from the Agency before they are implemented.</P> <P>(b) <E T="03">Liquidation plan.</E> If a default cannot be cured after considering servicing options and mediation, the lender will proceed with liquidation of the collateral in accordance with the following:</P> <P>(1) Within 30 days of the decision to liquidate, standard eligible and CLP lenders will submit a written liquidation plan to the Agency which includes:</P> <P>(i) Current balance sheets from all liable parties or, if the parties are not cooperative, the best information available, or in liquidation bankruptcies, a copy of the bankruptcy schedules or discharge notice;</P> <P>(ii) A proposed method of maximizing the collection of debt which includes specific plans to collect any remaining loan balances on the guaranteed loan after loan collateral has been liquidated, including possibilities for judgment;</P> <P>(A) If the borrower has converted loan security, the lender will determine whether litigation is cost effective. The lender must address, in the liquidation plan, whether civil or criminal action will be pursued. If the lender does not pursue the recovery, the reason must be documented when an estimated loss claim is submitted.</P> <P>(B) Any proposal to release the borrower from liability will be addressed in the liquidation plan in accordance with § 762.146(c)(2);</P> <P>(iii) An independent appraisal report on all collateral securing the loan that meets the requirements of § 762.127 and a calculation of the net recovery value of the security as defined in § 762.102. The appraisal requirement may be waived by the Agency in the following cases:</P> <P>(A) The bankruptcy trustee is handling the liquidation and the lender has submitted the trustee's determination of value;</P> <P>(B) The lender's proposed method of liquidation rarely results in receipt of less than market value for livestock and used equipment; or</P> <P>(C) A purchase offer has already been received for more than the debt;</P> <P>(iv) An estimate of time necessary to complete the liquidation;</P> <P>(v) An estimated loss claim if the liquidation period is expected to exceed 90 days.</P> <P>(vi) An estimate of reasonable liquidation expenses; and</P> <P>(vii) An estimate of any protective advances.</P> <P>(2) PLP lenders will submit a liquidation plan as required by their lender's agreement.</P> <P>(c) <E T="03">Agency approval of the liquidation plan.</E> (1) CLP lender's or standard eligible lender's liquidation plan, and any revisions of the plan, must be approved by the Agency.</P> <P>(2) If, within 20 calendar days of the Agency's receipt of the liquidation plan, the Agency fails to approve it or fails to request that the lender make revisions, the lender may assume the plan is approved. The lender may then proceed to begin liquidation actions at its discretion as long as it has been at least 60 days since the borrower's eligibility for interest assistance was considered.</P> <P>(3) At its option, the Agency may liquidate the guaranteed loan as follows:</P> <P>(i) Upon Agency request, the lender will transfer to the Agency all rights and interests necessary to allow the Agency to liquidate the loan. The Agency will not pay the lender for any loss until after the collateral is liquidated and the final loss is determined; and</P> <P>(ii) If the Agency conducts the liquidation, interest accrual will cease on the date the Agency notifies the lender in writing that it assumes responsibility for the liquidation.</P> <P>(d) <E T="03">Estimated loss claims.</E> An estimated loss claim will be submitted by the lender with the liquidation plan if the liquidation is expected to exceed 90 days. The estimated loss will be based on the following:</P> <P>(1) The Agency will pay the lender the guaranteed percentage of the total <PRTPAGE P="162"/>outstanding debt, less the net recovery value of the remaining security, less any unaccounted for security; and</P> <P>(2) The lender will discontinue interest accrual on the defaulted loan at the time the estimated loss claim is paid by the Agency. If the lender estimates that there will be no loss after considering the costs of liquidation, interest accrual will cease 90 days after the decision to liquidate or an estimated loss of zero will be submitted.</P> <P>(3) Packager fees and outside consultant fees for servicing of guaranteed loans are not covered by the guarantee, and will not be paid in an estimated loss claim.</P> <P>(e) <E T="03">Protective advances.</E> (1) Prior written authorization from the Agency is required for all protective advances in excess of $5,000 for CLP lenders and $3,000 for standard eligible lenders. The dollar amount of protective advances allowed for PLP lenders will be specified when PLP status is awarded by the Agency or as contained in the lender's agreement.</P> <P>(2) The lender may claim recovery for the guaranteed portion of any loss of monies advanced as protective advances as allowed in this part, plus interest that accrues on the protective advances.</P> <P>(3) Payment for protective advances is made by the Agency when the final loss claim is approved, except in bankruptcy actions.</P> <P>(4) Protective advances are used only when the borrower is in liquidation, liquidation is imminent, or when the lender has taken title to real property in a liquidation action.</P> <P>(5) Legal fees are not a protective advance.</P> <P>(6) Protective advances may only be made when the lender can demonstrate the advance is in the best interest of the lender and the Agency.</P> <P>(7) Protective advances must constitute a debt of the borrower to the lender and be secured by the security instrument.</P> <P>(8) Protective advances must not be made in lieu of additional loans.</P> <P>(f) <E T="03">Unapproved loans or advances.</E> The amount of any payments made by the borrower on unapproved loans or advances outside of the guarantee will be deducted from any loss claim submitted by the lender on the guaranteed loan, if that loan or advance was paid prior to, and to the detriment of, the guaranteed loan.</P> <P>(g) <E T="03">Acceleration.</E> (1) If the borrower is not in bankruptcy, the lender shall send the borrower notice that the loan is in default and the entire debt has been determined due and payable immediately after other servicing options have been exhausted.</P> <P>(2) The loan cannot be accelerated until after the borrower has been considered for interest assistance and the conclusion of mandatory mediation in accordance with § 762.149.</P> <P>(3) The lender will submit a copy of the acceleration notice or other document to the Agency.</P> <P>(h) <E T="03">Foreclosure.</E> (1) The lender is responsible for determining the necessary parties to any foreclosure action, or who should be named on a deed of conveyance taken in lieu of foreclosure.</P> <P>(2) When the property is liquidated, the lender will apply the net proceeds to the guaranteed loan debt.</P> <P>(3) When it is necessary to enter a bid at a foreclosure sale, the lender may bid the amount that it determines is reasonable to protect its and the Agency's interest. At a minimum, the lender will bid the lesser of the net recovery value or the unpaid guaranteed loan balance.</P> <P>(i) <E T="03">Final loss claims.</E> (1) Lenders may submit a final loss claim when the security has been liquidated and all proceeds have been received and applied to the account.</P> <P>(2) If a lender acquires title to property either through voluntary conveyance or foreclosure proceeding, the lender will submit a final loss claim after disposing of the property. The lender may pay reasonable maintenance expenses to protect the value of the property while it is owned by the lender. These may be paid as protective advances or deducted as liquidation expenses from the sales proceeds when the lender disposes of the property. The lender must obtain Agency written concurrence before incurring maintenance expenses which exceed the amounts allowed in § 762.149(e)(1). Packager fees and outside consultant fees for servicing of guaranteed loans are <PRTPAGE P="163"/>not covered by the guarantee, and will not be paid in a final loss claim.</P> <P>(3) The lender will make its records available to the Agency for the Agency's audit of the propriety of any loss payment.</P> <P>(4) All lenders will submit the following documents with a final loss claim:</P> <P>(i) An accounting of the use of loan funds;</P> <P>(ii) An accounting of the disposition of loan security and its proceeds;</P> <P>(iii) A copy of the loan ledger indicating loan advances, interest rate changes, protective advances, and application of payments, rental proceeds, and security proceeds, including a running outstanding balance total; and</P> <P>(iv) Documentation, as requested by the Agency, concerning the lender's compliance with the requirements of this part.</P> <P>(5) The Agency will notify the lender of any discrepancies in the final loss claim or, approve or reject the claim within 40 days.</P> <P>(6) The Agency will reduce a final loss claim based on its calculation of the dollar amount of loss caused by the lender's negligent servicing of the account. Loss claims may be reduced or rejected as a result of the following:</P> <P>(i) A loss claim may be reduced by the amount caused by the lender's failure to secure property after a default, and will be reduced by the amount of interest that accrues when the lender fails to contact the borrower or takes no action to cure the default, once it occurs. Losses incurred as a result of interest accrual during excessive delays in collection, as determined by the Agency, will not be paid.</P> <P>(ii) Unauthorized release of security proceeds, failure to verify ownership or possession of security to be purchased, or failure to inspect collateral as often required so as to ensure its maintenance.</P> <P>(7) Losses will not be reduced for the following:</P> <P>(i) Servicing deficiencies that did not contribute materially to the dollar amount of the loss.</P> <P>(ii) Unaccounted security, as long as the lender's efforts to locate and recover the missing collateral was equal to that which would have been expended in the case of an unguaranteed loan in the lender's portfolio.</P> <P>(8) Default interest, late charges, and loan servicing fees are not payable under the loss claim.</P> <P>(9) The final loss will be the remaining outstanding balance after application of the estimated loss payment and the application of proceeds from the liquidation of the security.</P> <P>(10) If the final loss is less than the estimated loss, the lender will reimburse the Agency for the overpayment, plus interest at the note rate from the date of the estimated loss payment.</P> <P>(11) The lender will return the original guarantee marked paid after receipt of a final loss claim.</P> <P>(j) <E T="03">Future Recovery.</E> The lender will remit any recoveries made on the account after the Agency's payment of a final loss claim to the Agency in proportion to the percentage of guarantee, in accordance with the lender's agreement, until the account is paid in full or otherwise satisfied.</P> <P>(k) <E T="03">Overpayments.</E> The lender will repay any final loss overpayment determined by the Agency upon request.</P> <P>(l) <E T="03">Electronic funds transfer.</E> The lender will designate one or more financial institutions to which any Agency payments will be made via electronic funds transfer.</P> <P>(m) <E T="03">Establishment of Federal debt.</E> Any amounts paid by the Agency on account of liabilities of the guaranteed loan borrower will constitute a Federal debt owing to the Agency by the guaranteed loan borrower. In such case, the Agency may use all remedies available to it, including offset under the Debt Collection Improvement Act of 1996, to collect the debt from the borrower. Interest charges will be established at the note rate of the guaranteed loan on the date the final loss claim is paid.</P> <CITA>[64 FR 7378, Feb. 12, 1999, as amended at 67 FR 44016, July 1, 2002; 69 FR 44580, July 27, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 762.150</SECTNO> <SUBJECT>Interest assistance program.</SUBJECT> <P>(a) <E T="03">Requests for interest assistance.</E> (1) To apply for interest assistance in conjunction with a new request for guarantee, the lender will submit the following:<PRTPAGE P="164"/> </P> <P>(i) A completed cash flow budget and interest assistance needs analysis portion of the application form. Interest assistance can be applied to each loan, only to one loan or any distribution the lender selects; however, interest assistance is only available on as many loans as necessary to achieve a feasible plan.</P> <P>(ii) For loans with unequal payments, a proposed debt repayment schedule which shows principal and interest payments for the subject loan, in each year of the loan.</P> <P>(2) To request interest assistance on an existing guaranteed loan, the lender must submit to the Agency the following:</P> <P>(i) A completed cash flow projection and interest assistance needs analysis portion of the application form. Interest assistance can be applied to each loan, only to one loan or any distribution the lender selects as required to achieve a feasible plan.</P> <P>(ii) For loans with unequal payments, a proposed debt repayment schedule which shows scheduled payments for the subject loan in each of the remaining years of the loan.</P> <P>(iii) Cash flow budgets and supporting justification to document that the request meets the requirements outlined in paragraph (b) of this section. This will include a typical cash flow if the projected cash flow budget is atypical.</P> <P>(3) Requests for interest assistance on lines of credit or loans made for annual operating purposes must be accompanied by a projected monthly cash flow budget.</P> <P>(b) <E T="03">Requirements.</E> (1) The typical term of scheduled loan repayment will not be reduced solely for the purpose of maximizing eligibility for interest assistance. To be eligible for interest assistance, a loan must be scheduled over the maximum terms typically used by lenders for similar type loans within the limits set by § 762.124 of this part. At a minimum, loans will be scheduled for repayment over the terms listed below, but for OL not to exceed the life of the security:</P> <P>(i) An OL for the purpose of providing annual operating and living expenses will be scheduled for repayment when the income is scheduled to be received from the sale of the crops, livestock, and livestock products which will serve as security for the loan.</P> <P>(ii) OL for purposes other than annual operating and living expenses (i.e. equipment, livestock, refinancing of existing debt) will be scheduled over 7 years from the effective date of the proposed interest assistance agreement.</P> <P>(iii) FO and SW secured by real estate will be scheduled for 20 years from the closing date of the original note covered by the guarantee.</P> <P>(2) The lender must document that a feasible plan, as defined in § 762.102(b), is not possible without reducing the interest rate on the borrower's loan and with the debt restructured over the term of repayment.</P> <P>(3) The lender must determine whether the borrower, including members of an entity, owns any significant assets that do not contribute directly to essential family living or farm operations. The lender must determine the market value of these assets and prepare a cash flow budget based on the assumption that the value of these assets will be used for debt reduction. If a feasible plan can then be achieved, the borrower is not eligible for interest assistance. All interest assistance calculations will be based on the cash flow budget which assumes that the assets will be sold.</P> <P>(4) A borrower's new guaranteed loan is eligible for interest assistance if all the following conditions are met:</P> <P>(i) The applicant needs interest assistance in order to achieve a feasible plan.</P> <P>(ii) If significant changes in the borrower's cash flow budget are anticipated after the initial 12 months, then the typical cash flow budget must demonstrate that the borrower will still have a feasible plan, following the anticipated changes, with or without interest assistance.</P> <P>(iii) If a feasible plan cannot be achieved, even with other creditors voluntarily adjusting their debts and with the interest assistance, the interest assistance request will not be approved.</P> <P>(5) An existing guaranteed loan is eligible for interest assistance if the borrower needs interest assistance to achieve a feasible plan as defined in <PRTPAGE P="165"/>§ 762.102(b), and the borrower meets the eligibility criteria of § 762.120, except the provision regarding prior debt forgiveness. If a feasible plan cannot be achieved, even with other creditors voluntarily adjusting their debts and with the interest assistance, the interest assistance request will not be approved. If a borrower has multiple loans, interest assistance may be provided on one or each loan, as available, to the extent necessary to achieve a feasible plan.</P> <P>(6) The term of the interest assistance agreement under this section shall not exceed 10 years from the date of the first interest assistance agreement signed by the loan applicant, including entity members, or the outstanding term of the loan, as limited by this section, whichever is less.</P> <P>(7) The lender may charge a fixed or variable interest rate. The type of rate must be the same as the type of rate in the underlying note or line of credit agreement. The lender will reduce the interest rate charged the borrower's account by at least the amount of interest assistance.</P> <P>(8) The borrower must be an operator of not larger than a family size farm.</P> <P>(c) <E T="03">Interest assistance closing.</E> (1) Initial guaranteed loans will be closed in accordance with § 762.130.</P> <P>(2) The lender will then prepare and deliver to the Agency a closing report for each initial and existing guaranteed loan which has been granted interest assistance.</P> <P>(3) When all requirements have been met, the lender and the Agency will execute an interest assistance agreement.</P> <P>(d) <E T="03">Interest assistance claims and payments.</E> (1) The interest assistance claim will be prepared by the lender. The following conditions apply to the claims process:</P> <P>(i) No claim period can exceed 12 months. The initial and final claim periods may be less than 12 months. In such claims, the 4 percent payment will be prorated over the number of months in the claim period. The period for all other claims must be 12 months.</P> <P>(ii) To permit the borrower to prepare for the upcoming year, a claim should be filed within 60 days of each anniversary date. Claims not filed within 1 year of the anniversary date will not be paid and the amount due the lender is permanently forfeited.</P> <P>(iii) If a claim is submitted without an interest assistance review in accordance with § 762.102, when it is required, the claim will not be processed until the review is submitted by the lender.</P> <P>(iv) Upon full payment of the note or line of credit, the lender will immediately prepare the request for interest assistance payment and submit it to the Agency.</P> <P>(v) Interest assistance payments shall cease upon the assumption and transfer of the loan if the transferee was not liable for the debt on the effective date of the interest assistance agreement. The lender shall request payment through the date of the transfer or assumption. The claim must be submitted within 1 year or it will be denied and the payment permanently forfeited.</P> <P>(vi) All claims will be supported by detailed calculations of average daily principal balances during the claim period.</P> <P>(vii) The Agency will review the claim and the supporting documentation. If the information and the supporting documentation is not complete and correct, the reviewing official will notify the lender in writing, of the actions needed to correct the request.</P> <P>(viii) If there is a substitution of lender, a claim for the first lender's interest assistance, through the effective date of the substitution, will be submitted by the first lender and processed at the time of the substitution.</P> <P>(ix) Interest assistance claims shall be submitted concurrently with the submission of estimated loss claims where interest accrual ceases, or final loss claims that are not preceded by an estimated loss claim.</P> <P>(2) [Reserved]</P> <P>(e) <E T="03">Request for continuation of interest assistance.</E> (1) For all interest assistance agreements exceeding 12 months, the lender will perform an analysis of the applicant's farming operation and need for continued interest assistance. The following information will be submitted to the Agency:</P> <P>(i) A summary of the operation's actual financial performance in the previous year, including a detailed income and expense statement.<PRTPAGE P="166"/> </P> <P>(ii) A narrative description of the causes of any major differences between the previous year's projections and actual performance.</P> <P>(iii) A current balance sheet.</P> <P>(iv) A cash flow budget for the period being planned. A monthly cash flow budget is required for all lines of credit and operating loans made for annual operating purposes. All other loans may include either an annual or monthly cash flow budget.</P> <P>(v) A copy of the interest assistance needs analysis portion of the application form which has been completed based on the planned period's cash flow budget.</P> <P>(2) The loan will be eligible for continuation of interest assistance if the cash flow budget projects a feasible plan with interest assistance applied. However, interest assistance can be applied only to as many loans as necessary to achieve a positive cash flow for the plan period. If the cash flow budget indicates that the borrower requires a level of interest assistance greater than 4 percent to project a feasible plan, then the Agency will deny the continuation of interest assistance. Interest assistance will be reduced to zero during that period. See § 762.102(b) for the definition of feasible plan.</P> <P>(3) The documentation listed above will be provided to the Agency concurrently with the lender's submission of its request for interest assistance payment. This information will be provided to the Agency within 60 days after the review date specified on the interest assistance agreement.</P> <P>(4) A request for continuation of interest assistance will be completed for 12 month periods, effective on the anniversary date.</P> <P>(5) The initial review may be submitted in conjunction with any claim within the initial 12 month period. The anniversary date and length of the review period will be stated on the interest assistance agreement. Any request for interest assistance adjustment submitted effective any time other than the review date will be denied, except for those cases where it is necessary to service the loan with rescheduling, reamortization, deferral or writedown.</P> <P>(6) If the review is not completed and submitted to the Agency within 1 year of the review date, no claim will be paid for that period.</P> <P>(f) <E T="03">Notification of Adverse Action.</E> The lender will be notified in writing of all Agency decisions in which a request for interest assistance, a request for continuation of interest assistance or lender's claim for interest assistance are denied. The notification letter will provide specific reasons for the decision and appeals will be handled in accordance with parts 11 and 780 of this title.</P> <P>(g) <E T="03">Servicing of loans covered by an interest assistance agreement.</E> (1) Loans covered by interest assistance agreements cannot be consolidated.</P> <P>(2) The loan will be transferred with the interest assistance agreement only in cases where the transferee was liable for the debt at the time interest assistance was granted. Under no other circumstances will the interest assistance be transferred. If interest assistance is necessary for the transferee to achieve a feasible plan, the lender may request such assistance, which may be approved if interest assistance funds are available and the applicant is eligible. The maximum length of the agreement will be 10 years from the date of the first agreement covering a loan for which the transferee was liable. If interest assistance is necessary for a feasible plan and funds are not available, the request for assumption of the Agency guaranteed debt will be denied.</P> <P>(3) When consideration is given to using a debt writedown to service a delinquent account, the subsidy level will be recalculated prior to any writedown. If a feasible plan can be obtained using interest assistance and funds are available, then the interest assistance will be authorized and no writedown will be approved. If a feasible plan cannot be achieved using 4 percent interest assistance, all further calculations for determining debt writedown eligibility and amounts to be written down will be based on the borrower receiving no interest assistance. If debt writedown is approved, the interest assistance claim for the previous review period will be processed in conjunction with the writedown loss claim. The interest assistance agreement will not be canceled and the anniversary date can remain the same or be re-established <PRTPAGE P="167"/>under the same guidelines that it was originally established. If the lender determines through its annual analysis that interest assistance is necessary for a feasible plan, a request to reinstate the subsidy in a subsequent review period may be submitted in accordance with paragraph (e) of this section.</P> <P>(4) In the event of rescheduling or deferral of loans with interest assistance, interest assistance will remain available for that loan under the terms of the existing interest assistance agreement. Additional years of interest assistance and/or increases in the restructured loan amount will require additional funding. If the additional interest assistance is needed in order to produce a feasible plan throughout the life of the rescheduled loan and funds are not available for the additional interest assistance, then the rescheduling will not be approved by the Agency. In no case will the subsidy be extended more than 10 years from the effective date of the first interest assistance agreement signed by the loan applicant or by anyone who signed the note or line of credit agreement.</P> <P>(5) In cases where the interest on a loan covered by an interest assistance agreement is reduced by court order in a reorganization plan under the bankruptcy code, interest assistance agreement will be terminated effective on the date of the court ordered interest reduction. The lender will file a claim due through the effective date of the court ordered interest reduction. Guaranteed loans which have had their interest reduced by bankruptcy court order are not eligible to receive interest assistance.</P> <P>(6) For Loan Guarantees held by holders, Agency purchase of the guaranteed portion of a loan will stop interest assistance payments on that portion. Interest assistance payments will cease upon termination of the Loan Guarantee, upon reaching the expiration date contained in the agreement or upon cancellation by the Agency.</P> <P>(7) When a borrower defaults on a loan, interest assistance may be considered in conjunction with a rescheduling action in accordance with § 762.145(b). After the meeting required by § 762.143(b)(3) and consideration of actions to correct the delinquency, the lender will notify the Agency of the results of the meeting. If the restructuring proposal includes interest assistance, the lender will provide the items required by paragraph (d) of this section in addition to those items required by § 762.145. Liquidation must not be initiated, except in accordance with § 762.143(b)(3)(v).</P> <P>(h) <E T="03">Cancellation of interest assistance agreement.</E> The interest assistance agreement is incontestable except for fraud or misrepresentation, of which the lender and borrower have actual knowledge at the time that the interest assistance agreement is executed, or which the lender or borrower participates in or condones.</P> <P>(i) <E T="03">Adjustment of assistance level between review dates.</E> After the initial or renewal request for interest assistance is processed, no adjustments can be made until the next review or adjustment date except when necessary to service the loan with a rescheduling or deferral.</P> <P>(j) <E T="03">Excessive interest assistance.</E> Upon written notice to the lender, borrower and any holder, the Agency may amend or cancel the interest assistance agreement and collect from the lender any amount of interest Assistance granted which resulted from incomplete or inaccurate information, an error in computation, or any other reason which resulted in payment that the lender was not entitled to receive.</P> <P>(k) The Deputy Administrator for Farm Loan Programs has the authority to grant an exception to any requirement involving interest Assistance if it is in the best interest of the Government.</P> <CITA>[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999, as amended at 66 FR 7567, Jan. 24, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§§ 762.151-762.158</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 762.159</SECTNO> <SUBJECT>Pledging of guarantee.</SUBJECT> <P>A lender may pledge all or part of the guaranteed or unguaranteed portion of the loan as security to a Federal Home Loan Bank, a Federal Reserve Bank, a Farm Credit System Bank, or any other funding source determined acceptable by the Agency.</P> <CITA>[70 FR 56107, Sept. 26, 2005]</CITA> </SECTION> <SECTION> <PRTPAGE P="168"/> <SECTNO>§ 762.160</SECTNO> <SUBJECT>Assignment of guarantee.</SUBJECT> <P>(a) The following general requirements apply to assigning guaranteed loans:</P> <P>(1) Subject to Agency concurrence, the lender may assign all or part of the guaranteed portion of the loan to one or more holders at or after loan closing, if the loan is not in default. However, a line of credit cannot be assigned. The lender must always retain the unguaranteed portion in their portfolio, regardless of how the loan is funded.</P> <P>(2) The Agency may refuse to execute the Assignment of Guarantee and prohibit the assignment in case of the following:</P> <P>(i) The Agency purchased and is holder of a loan that was assigned by the lender that is requesting the assignment.</P> <P>(ii) The lender has not complied with the reimbursement requirements of § 762.144(c)(7), except when the 180 day reimbursement or liquidation requirement has been waived by the Agency.</P> <P>(3) The lender will provide the Agency with copies of all appropriate forms used in the assignment.</P> <P>(4) The guaranteed portion of the loan may not be assigned by the lender until the loan has been fully disbursed to the borrower.</P> <P>(5) The lender is not permitted to assign any amount of the guaranteed or unguaranteed portion of the loan to the loan applicant or borrower, or members of their immediate families, their officers, directors, stockholders, other owners, or any parent, subsidiary, or affiliate.</P> <P>(6) Upon the lender's assignment of the guaranteed portion of the loan, the lender will remain bound to all obligations indicated in the Guarantee, Lender's Agreement, the Agency program regulations, and to future program regulations not inconsistent with the provisions of the Lenders Agreement. The lender retains all rights under the security instruments for the protection of the lender and the United States.</P> <P>(b) The following will occur upon the lender's assignment of the guaranteed portion of the loan:</P> <P>(1) The holder will succeed to all rights of the Guarantee pertaining to the portion of the loan assigned.</P> <P>(2) The lender will send the holder the borrower's executed note attached to the Guarantee.</P> <P>(3) The holder, upon written notice to the lender and the Agency, may assign the unpaid guaranteed portion of the loan. The holder must assign the guaranteed portion back to the original lender if requested for servicing or liquidation of the account.</P> <P>(4) The Guarantee or Assignment of Guarantee in the holder's possession does not cover:</P> <P>(i) Interest accruing 90 days after the holder has demanded repurchase by the lender, except as provided in the Assignment of Guarantee and § 762.144(c)(3)(iii).</P> <P>(ii) Interest accruing 90 days after the lender or the Agency has requested the holder to surrender evidence of debt repurchase, if the holder has not previously demanded repurchase.</P> <P>(c) Negotiations concerning premiums, fees, and additional payments for loans are to take place between the holder and the lender. The Agency will participate in such negotiations only as a provider of information.</P> <CITA>[70 FR 56107, Sept. 26, 2005]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 764</EAR> <HD SOURCE="HED">PART 764—EMERGENCY FARM LOANS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>764.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>764.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>764.3</SECTNO> <SUBJECT>Emergency loan funds uses.</SUBJECT> <SECTNO>764.4</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <SECTNO>764.5</SECTNO> <SUBJECT>Limitations.</SUBJECT> <SECTNO>764.6</SECTNO> <SUBJECT>Interest rate.</SUBJECT> <SECTNO>764.7</SECTNO> <SUBJECT>Loan terms.</SUBJECT> <SECTNO>764.8</SECTNO> <SUBJECT>Repayment and security requirements.</SUBJECT> <SECTNO>764.9</SECTNO> <SUBJECT>Appraisal and valuation requirements.</SUBJECT> <SECTNO>764.10</SECTNO> <SUBJECT>Insurance for loan security.</SUBJECT> <SECTNO>764.11</SECTNO> <SUBJECT>Charges and fees.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301 and 7 U.S.C. 1989.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>67 FR 795, Jan. 8, 2002, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 764.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>The purpose of the Emergency Loan Program is to provide financial assistance to family farmers who have suffered losses as the result of a disaster so that they can return to normal farming operations as soon as possible after the disaster. Specifically, this <PRTPAGE P="169"/>part describes the policies and procedures of the Agency for making Emergency loans to operators of such farms.</P> </SECTION> <SECTION> <SECTNO>§ 764.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Act</E> means the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 <E T="03">et seq.</E>).</P> <P> <E T="03">Additional security</E> means property that provides security in excess of the amount of security value equal to the loan amount, excluding security described in § 764.8(g).</P> <P> <E T="03">Adequate security</E> means property that provides a security value at least equal to the loan amount.</P> <P> <E T="03">Agency</E> means the Farm Service Agency, including its employees, any predecessor agency, and any successor agency.</P> <P> <E T="03">Agricultural commodity</E> means livestock, grains, cotton, oilseeds, dry beans, tobacco, peanuts, sugar beets, sugar cane, fruit, vegetable, forage, tree farming, nursery crops, nuts, aquacultural species, and other plant or animal production as determined by the Agency.</P> <P> <E T="03">Allowable costs</E> means those costs for replacement or repair that are supported by acceptable documentation, including but not limited to written estimates, invoices, and bills.</P> <P> <E T="03">Applicant</E> means an individual or entity (including each owner of the entity unless specified otherwise) operating a farming operation at the time of the disaster, who is requesting assistance from the Agency under this part. All requirements of applicants apply to owners of the entity individually and collectively unless specified otherwise.</P> <P> <E T="03">Aquacultural species</E> means aquatic organisms (including fish, mollusks, crustaceans or other invertebrates, amphibians, reptiles, or aquatic plants) raised in a controlled or selected environment which the applicant has exclusive rights to use.</P> <P> <E T="03">Basic part of an applicant's total farming operation</E> means any single agricultural commodity or livestock production enterprise of an applicant's farming operation which normally generates sufficient income to be considered essential to the success of such farming operation.</P> <P> <E T="03">Borrower</E> means an individual or entity which has an outstanding obligation to the Agency under any Farm Loan Program loan, without regard to whether the loan has been accelerated. A borrower includes all parties liable for such obligation owed to the Agency, including collection-only borrowers, except for debtors whose total loans and accounts have been voluntarily or involuntarily foreclosed, sold, or conveyed; or who have been discharged of all such obligations owed to the Agency.</P> <P> <E T="03">Chattel</E> means any property that is not real estate.</P> <P> <E T="03">Chattel or real estate essential to the farming operation</E> means chattel or real estate that would be necessary for the applicant to continue operating the farm on and after the disaster in a manner similar to the manner in which the farm was operated immediately prior to the disaster, as determined by the Agency.</P> <P> <E T="03">Corporation</E> means a private domestic entity recognized as a corporation and authorized as a corporation under the laws of the State or States in which the entity does business.</P> <P> <E T="03">County</E> means a local administrative subdivision of a State or similar political subdivision of the United States.</P> <P> <E T="03">Debt forgiveness</E> means reducing or terminating a debt under the Act in a manner that results in a loss to the Agency (excluding a consolidation, rescheduling, reamortization, or deferral), through:</P> <P>(1) Writing down or writing off a debt pursuant to 7 U.S.C. 2001;</P> <P>(2) Compromising, adjusting, reducing, or charging off a debt or claim pursuant to 7 U.S.C. 1981; or</P> <P>(3) Paying a loss pursuant to 7 U.S.C. 2005 on a Farm Loan Program loan guaranteed by the Agency.</P> <P> <E T="03">Disaster</E> means an event of unusual and adverse weather conditions, other natural phenomena, or quarantine, that has substantially affected producers of agricultural commodities by causing physical property or production losses in a county, or similar political subdivision, that triggered the inclusion of such county or political subdivision in the disaster area designated by the Agency.</P> <P> <E T="03">Disaster area</E> means the county, declared or designated as a disaster area <PRTPAGE P="170"/>for Emergency loan assistance as a result of disaster related losses and counties contiguous to those counties declared or designated as disaster areas.</P> <P> <E T="03">Disaster yield</E> means the per-acre yield of an agricultural commodity for the farming operation during the production period when the disaster occurred.</P> <P> <E T="03">Entity</E> means a partnership, corporation, cooperative, joint operation, trust or limited liability company that is an operator of an operation engaged in farming, ranching, or aquaculture activities at the time the disaster occurs.</P> <P> <E T="03">Essential family household expenses</E> means the expenses associated with providing food, clothing, and shelter necessary to maintain the borrower and the immediate family of the borrower.</P> <P> <E T="03">Established farmer</E> means a farmer who is an operator of the farming operation (in the case of a farming operation operated by an entity, its owners as a group) who:</P> <P>(1) Actively participated in the operation and the management, including but not limited to, exercising control over, making decisions regarding, and establishing the direction of the farming operation at the time of the disaster;</P> <P>(2) Spends a substantial portion of time in carrying out the farming operation;</P> <P>(3) Planted the crop, or purchased or produced the livestock on the farming operation;</P> <P>(4) In the case of an entity, is primarily engaged in farming and has over 50 percent of its gross income from all sources from its farming operation based on the farming operation's projected cash flow for the next crop year or the next 12 month period, as mutually determined; and</P> <P>(5) Is not:</P> <P>(i) A corporation with an ownership interest of 50 percent or more held by one or more estates, trusts, other corporations, partnerships, or joint operations;</P> <P>(ii) A partnership or joint operation with an ownership interest of 50 percent or more held by one of more estates, trusts, corporations, other partnerships or other joint operations;</P> <P>(iii) An integrated livestock, poultry, or fish processor who operates primarily and directly as a commercial business through contracts or business arrangements with farmers, except a grower under contract with an integrator or processor may be considered an established farmer, provided the operation is not managed by an outside full-time manager or management service and such loans shall be based on the applicant's share of the agricultural production as contained in the contract; or</P> <P>(iv) An operation that employs a full-time farm manager.</P> <P> <E T="03">Family farm</E> means a farm that:</P> <P>(1) Produces agricultural commodities for sale in sufficient quantities so that it is recognized in the community as a farm rather than a rural residence.</P> <P>(2) Provides enough agricultural income by itself, including rented land, or together with any other dependable income, to enable the borrower to:</P> <P>(i) Pay necessary family and operating expenses;</P> <P>(ii) Maintain essential chattel and real property; and</P> <P>(iii) Pay debts.</P> <P>(3) Is managed by:</P> <P>(i) The borrower, when a loan is made to an individual.</P> <P>(ii) The members, stockholders, partners, or joint operators responsible for operating the farm when a loan is made to an entity.</P> <P>(4) Has a substantial amount of the labor requirements for the farm enterprise provided by:</P> <P>(i) The borrower and family members for a loan made to an individual.</P> <P>(ii) The members, stockholders, partners, or joint operators responsible for operating the farm, along with the families of these individuals, for a loan made to an entity.</P> <P>(5) May use a reasonable amount of full-time hired labor and seasonal labor during peak load periods.</P> <P> <E T="03">Farm Loan Program loan</E> means a Farm Ownership loan, Operating loan, Emergency loan, Soil and Water loan, or Economic Emergency loan made or guaranteed by the Agency pursuant to the Act.</P> <P> <E T="03">Farmer</E> means individuals, cooperatives, corporations, partnerships or joint operations who are farmers, <PRTPAGE P="171"/>ranchers, or aquaculture operators actively engaged in their operation at the time a disaster occurs.</P> <P> <E T="03">Feasible plan</E> means a plan based upon the applicant's records that show the farming operation's actual production and expenses. These records will be used along with realistic anticipated prices, including farm program payments when available, to determine that the income from the farming operation, along with any other reliable off-farm income, will provide the income necessary for an applicant to at least be able to:</P> <P>(1) Pay all operating expenses and all taxes that are due during the projected farm budget period;</P> <P>(2) Meet necessary payments on all debts; and</P> <P>(3) Provide living expenses for family members of an individual borrower or a wage of the farm operator in the case of an entity borrower which is in accordance with the essential family needs. Family members include the individual borrower, or farm operator in the case of an entity, and the immediate members of the family who reside in the same household.</P> <P> <E T="03">Hazard insurance</E> means coverage against losses due to fire, windstorm, lightning, hail, explosion, business interruption, riot, civil commotion, aircraft, land vehicles, marine vehicles, smoke, builders risk, public liability, property damage, flood or mudslide, workman's compensation, or any similar insurance that is available and needed to protect the security, or that is required by law.</P> <P> <E T="03">Household contents</E> means the essential household items necessary to maintain viable living quarters such as: stove, refrigerator, furnace, couch, chairs, tables, beds, lamps, clothes, etc. The term excludes all luxury items including jewelry, furs, antiques, paintings, etc.</P> <P> <E T="03">Livestock</E> means a member of the animal kingdom, or product thereof, as determined by the Agency.</P> <P> <E T="03">Majority interest</E> means an ownership interest of more than 50 percent of the entity.</P> <P> <E T="03">Non-essential asset</E> means those assets in which the applicant has an ownership interest that do not contribute a net income to pay essential family living expenses or to maintain a sound farming operation and are not exempt from judgment creditors or in a bankruptcy action.</P> <P> <E T="03">Nonfarm enterprise</E> means any nonfarm business enterprise, including recreation, that is closely associated with the farm operation and located on or adjacent to the farm and provides income to supplement farm income. This may include, but is not limited to, such enterprises as raising earthworms, exotic birds, tropical fish, dogs, and horses for nonfarm purposes, welding shops, roadside stands, boarding horses and riding stables.</P> <P> <E T="03">Normal production yield</E> means:</P> <P>(1) The per-acre actual production history of the crops produced by the farming operation used to determine Federal crop insurance payments or payment under the Non-Insured Assistance Program for the production year during which the disaster occurred;</P> <P>(2) When the actual production history is not available, the applicant's own production records for the previous three years will be used. If the applicant's production records are not available, the records of production on which FSA farm program payments are made that are contained in the applicant's farm program file, for the previous three years will be used;</P> <P>(3) When the production records outlined in paragraphs (a) and (b) of this definition are not available, the county average production yield will be used.</P> <P> <E T="03">Owner</E> means those persons with an interest in the entity as a stockholder, partner, member, or joint operator.</P> <P> <E T="03">Physical loss</E> means verifiable damage or destruction with respect to real estate or chattel, excluding annual growing crops.</P> <P> <E T="03">Production loss</E> means verifiable damage or destruction with respect to annual growing crops.</P> <P> <E T="03">Quarantine</E> means a quarantine imposed by the Secretary under the Plant Protection Act or animal quarantine laws (as defined in section 2509 of the Food, Agriculture, Conservation and Trade Act of 1990).</P> <P> <E T="03">Security value</E> means the Agency-established market value of property (less the value of any prior liens) used as security for a loan under this part as of the date of the closing of the loan.<PRTPAGE P="172"/> </P> <P> <E T="03">United States</E> means each of the several States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.</P> <P> <E T="03">Working capital</E> means cash available to conduct normal daily farming or ranching operations including, but not limited to, feed, seed, fertilizer, pesticides, farm or ranch supplies, cooperative stock, and cash rent.</P> <CITA>[67 FR 795, Jan. 8, 2002; 67 FR 7941, Feb. 21, 2002, as amended at 68 FR 7695, Feb. 18, 2003]</CITA> </SECTION> <SECTION> <SECTNO>§ 764.3</SECTNO> <SUBJECT>Emergency loan funds uses.</SUBJECT> <P>(a) <E T="03">Physical losses</E>—(1) <E T="03">Real estate losses.</E> Emergency loans may be used to address the needs of the farming operation associated with physical losses of essential real estate that were the result of a disaster to:</P> <P>(i) Acquire or enlarge the farm, as specified in § 1943.16(a) of this title, as long such acquisition or enlargement does not cause the farm to exceed the requirements for a family farm;</P> <P>(ii) Replace or repair buildings or other structures which are essential to the ongoing viability of the operation. The Agency will finance such replacement or repair only to the extent that the structures conform to industry standards and meet the needs of the operation and intended purposes of the structure.</P> <P>(iii) Pay for activities to promote soil and water conservation and protection on the family farm as specified in § 1943.16(c) of this title;</P> <P>(iv) Pay loan closing costs related to acquiring, enlarging, or improving the family farm as specified in § 1943.16(d) of this title, that an applicant cannot pay from other sources;</P> <P>(v) Replace land or water resources on the family farm which resources cannot be restored;</P> <P>(vi) Pay costs associated with land and water development for conservation or use purposes;</P> <P>(vii) Establish a new site for farm dwelling and service buildings outside of a flood or mudslide area; and</P> <P>(viii) Replace land from the family farm that was sold or conveyed as a direct result of the disaster, if such land is necessary for the farming operation to be effective.</P> <P>(2) <E T="03">Chattel losses.</E> Emergency loans may be used to address the needs of the farming operation associated with the physical losses of essential chattel that were the result of a disaster to:</P> <P>(i) Purchase livestock and farm equipment, including but not limited to quotas, and cooperative stock for credit, production, processing, or marketing purposes;</P> <P>(ii) Pay customary costs associated with obtaining, planning, and closing a loan that an applicant cannot pay from other sources (<E T="03">e.g.</E> fees for legal, architectural, and other technical services, but not fees for agricultural management consultation and preparation of Agency forms);</P> <P>(iii) Repair or replace <E T="03">essential</E> household contents damaged in the disaster;</P> <P>(iv) Pay the costs to restore perennials that produce an agricultural commodity, to the stage of development the damaged perennials had obtained prior to the disaster;</P> <P>(v) In the case of a farming operation that has suffered livestock losses not from breeding stock, pay essential farm operating and family household expenses; and</P> <P>(vi) Refinance debt (in the case of Farm Loan Program loan debt, as long as the applicant has not refinanced the loan more than 4 times).</P> <P>(b) <E T="03">Production losses.</E> Emergency loans may be used to address the losses of the farming operation associated with production of agricultural commodities (except the losses associated with the loss of livestock) of the farming operation that were the result of a disaster to:</P> <P>(1) Pay costs associated with reorganizing the family farm to improve its profitability except that such costs shall not include the payment of bankruptcy expenses;</P> <P>(2) Pay annual operating expenses, which include, but are not limited to, feed, seed, fertilizer, pesticides, farm or ranch supplies, cooperative stock, and cash rent;</P> <P>(3) Pay costs associated with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. 655 and 667) if the applicant can show that compliance or non-compliance with the standards will cause substantial economic injury;<PRTPAGE P="173"/> </P> <P>(4) Pay training costs required or recommended by the Agency;</P> <P>(5) Pay essential family household expenses;</P> <P>(6) Refinance debt (in the case of Farm Loan Program loan debt, as long as the applicant has not refinanced the loan more than 4 times); and</P> <P>(7) Replace lost working capital.</P> </SECTION> <SECTION> <SECTNO>§ 764.4</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <P>(a) <E T="03">General borrower eligibility requirements.</E> An applicant for an Emergency loan must meet the following requirements:</P> <P>(1) <E T="03">Legal capacity.</E> The applicant must have the legal capacity to incur the obligation of the loan.</P> <P>(2) <E T="03">Citizenship.</E> (i) The applicant must be a citizen of the United States, a United States non-citizen national, or a qualified alien under applicable Federal immigration laws. For an entity applicant, the majority interest of the entity must be held by members who are United States citizens, United States non-citizen nationals, or qualified aliens under applicable Federal immigration laws.</P> <P>(ii) United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.</P> <P>(3) <E T="03">Family farm and nonfarm enterprise.</E> The applicant's farming operation must qualify as a family farm and must not be a nonfarm enterprise.</P> <P>(4) <E T="03">Established farmer.</E> An applicant must be an established farmer.</P> <P>(5) <E T="03">Owner and operator requirements</E>—(i) <E T="03">Loans for physical losses to real estate.</E> In the case of a loan for a purpose specified in § 764.3(a)(1), an applicant must be:</P> <P>(A) The owner and operator of the farming operation; or</P> <P>(B) An operator of the farming operation whose lease on the affected real estate would exceed the term of the loan and give the Agency prior notification of the termination of the lease during the term of the loan, and whose lessor would provide the Agency a mortgage on the real estate as security for the loan.</P> <P>(ii) <E T="03">Loans for physical losses to chattel.</E> In the case of a loan for a purpose specified in § 764.3(a)(2), an applicant must be the operator of the farming operation.</P> <P>(iii) <E T="03">Loans for production losses.</E> In the case of a loan for a purpose specified in § 764.3(b), an applicant must be the operator of the farming operation.</P> <P>(6) <E T="03">Entity applicants.</E> For entity applicants:</P> <P>(i) If the owners holding a majority interest in the entity applicant are related by blood or marriage, at least one of such related owners must operate the family farm.</P> <P>(ii) If the owners holding a majority interest in the entity applicant are not related by blood or marriage, the majority interest holders must all operate the family farm.</P> <P>(iii) If the entity applicant has an operator interest in any other farming operation, that farming operation must not exceed the requirements of a family farm.</P> <P>(7) <E T="03">Intent to continue farming.</E> The applicant must demonstrate the intent to continue the farm operation after the disaster.</P> <P>(8) <E T="03">Credit history.</E> The applicant must demonstrate a credit history satisfactory to the Agency. As part of the credit history the Agency will determine whether the applicant has dealt with the Agency in good faith. This includes the applicant providing current, complete, and truthful information when applying for assistance and in all past dealings with the Agency. The Agency will also examine whether the applicant has properly fulfilled its obligations to other parties, including other Federal agencies. The Agency may use credit reports or any other available information to evaluate credit history.</P> <P>(9) <E T="03">Availability of credit elsewhere.</E> The applicant must be unable to obtain sufficient credit elsewhere at reasonable rates and terms. To establish this, the applicant must obtain written declinations of credit from legally organized commercial lending institutions within reasonable proximity of the applicant that specify the reasons for the declination as follows:</P> <P>(i) In the case of a loan for $300,000 or more, two written declinations of credit are required;<PRTPAGE P="174"/> </P> <P>(ii) In the case of a loan of less than $300,000, one written declination of credit is required; and</P> <P>(iii) In the case of a loan of $100,000 or less, the Agency may waive the requirement for obtaining a written declination of credit if the Agency determines that it would pose an undue burden on the applicant, the applicant certifies that they cannot get credit elsewhere, and based on the applicant's circumstances credit is not likely to be available;</P> <P>(iv) Notwithstanding the applicant's submission of the required written declinations of credit, the Agency may contact other commercial lending institutions within reasonable proximity of the applicant and make an independent determination of the applicant's ability to obtain credit elsewhere.</P> <P>(10) <E T="03">Prior debt forgiveness.</E> The applicant must not have received debt forgiveness from the Agency on more than one occasion on or before April 4, 1996, or any time after April 4, 1996.</P> <P>(11) <E T="03">Federal judgment lien.</E> The applicant's property must not be subject to a Federal judgment lien (other than a United States Tax Court lien).</P> <P>(12) <E T="03">Managerial ability.</E> The applicant must have sufficient managerial ability to assure reasonable prospects of loan repayment, as determined by the Agency. The applicant must demonstrate this managerial ability by education, on-the-job training, or farming experience within the last 5 years that covers an entire production cycle.</P> <P>(13) <E T="03">Borrower training.</E> The applicant must agree to meet the borrower training requirements in accordance with § 1924.74 of this title.</P> <P>(14) <E T="03">Prior drug convictions.</E> The applicant cannot have been convicted under Federal or State law of planting, cultivating, growing, producing, harvesting, or storing a controlled substance, as defined in 21 CFR part 1308, during the current crop year or the previous 4 crop years.</P> <P>(15) <E T="03">Recovery of duplicative benefits.</E> The applicant must agree to repay any duplicative Federal assistance to the agency providing such assistance. A person receiving Federal assistance for a major disaster or emergency is liable to the United States to the extent that the assistance duplicates benefits available to the person for the same purpose from another source.</P> <P>(b) <E T="03">Additional Emergency loan eligibility requirements</E>—(1) <E T="03">Timely loan application.</E> A loan application must be received by the Agency not later than 8 months after the date the disaster is declared or designated in the county of the applicant's farming operation.</P> <P>(2) <E T="03">Qualifying losses</E>—(i) <E T="03">Loss must occur in a disaster area.</E> The applicant may seek an Emergency loan only with respect to a family farm that had production or physical losses as a result of a disaster in a disaster area.</P> <P>(ii) <E T="03">Eligible production loss.</E> For production loss loans, the applicant must have a disaster yield that is at least 30 percent below the normal production yield of any single crop, as determined by the Agency, that comprises a basic part of an applicant's total farming operation.</P> <P>(iii) <E T="03">Eligible physical loss.</E> For physical loss loans, the applicant must have suffered disaster-related damage to chattel or real estate essential to the farming operation, to household items that must be repaired or replaced, to harvested or stored crops, or to perennial crops.</P> <P>(3) <E T="03">Changes in ownership structure.</E> The ownership structure of a family farm may change between the time of a qualifying loss and the time an Emergency loan is closed. In such case, all of the following requirements must be met:</P> <P>(i) The applicant, in its new form, including all owners must meet all applicable eligibility requirements contained in this section;</P> <P>(ii) The new individual applicant, or all owners of a new entity applicant must have had an ownership interest in the farming operation at the time of the disaster; and</P> <P>(iii) The amount of the loan will be based on the percentage of the former farming operation transferred to the new applicant and in no event will the individual portions, aggregated, equal more than would have been authorized for the former farming operation.</P> <P>(4) <E T="03">Insurance requirement.</E> Emergency loan funds may not be used for physical loss purposes (excluding losses to livestock) unless that physical property <PRTPAGE P="175"/>was covered by general hazard insurance at the time that the damage caused by the natural disaster occurred. The level of the coverage in effect at the time of the disaster must have been the tax or cost depreciated value, whichever is less. Chattel property must have been covered at the tax or cost depreciated value, whichever is less, when such insurance was readily available and the benefits of the coverage (i.e. the amount of coverage equaling the lesser of the property's tax or cost depreciated value) justify the cost of the insurance.</P> <CITA>[67 FR 795, Jan. 8, 2002, as amended at 68 FR 62223, Nov. 3, 2003]</CITA> </SECTION> <SECTION> <SECTNO>§ 764.5</SECTNO> <SUBJECT>Limitations.</SUBJECT> <P>(a) <E T="03">General limitations</E>—(1) <E T="03">Highly erodible soil and wetlands conservation.</E> The Agency will not make a loan under this part for any purpose that contributes to erosion of highly-erodible land or the conversion of wetlands to produce an agricultural commodity.</P> <P>(2) <E T="03">Construction.</E> Any construction financed by the Agency must comply with applicable Federal, State, local, and industry building standards and subpart A of part 1924 of this title.</P> <P>(3) <E T="03">Refinancing.</E> Emergency loan funds may not be used to refinance consumer debt, such as automobile loans, or credit card debt unless such credit card debt is directly attributable to the farming operation.</P> <P>(b) <E T="03">Restriction on loan amount.</E> An Emergency loan may not exceed the lesser of:</P> <P>(1) The amount of credit necessary to restore the family farming operation to its pre-disaster condition;</P> <P>(2) In the case of a physical loss loan, the total eligible physical losses caused by the disaster; or</P> <P>(3) In the case of a production loss loan, 100 percent of the total actual production loss sustained by the applicant calculated pursuant to paragraph (d) of this section.</P> <P>(c) <E T="03">Maximum cumulative loan principal.</E> The maximum cumulative Emergency loan principal that any individual or entity may have outstanding is $500,000.</P> <P>(d) <E T="03">Production losses.</E> The applicant's actual production loss with respect to a crop is calculated as follows:</P> <P>(1) Subtract the applicant's disaster yield from the applicant's normal production yield to determine the applicant's per acre production loss;</P> <P>(2) Multiply the applicant's per acre production loss by the number of acres of the farming operation devoted to the crop to determine the volume of the production loss;</P> <P>(3) Multiply the volume of the applicant's production loss by the market price for such crop as determined by the Agency to determine the dollar value for the production loss; and</P> <P>(4) Subtract any other disaster related compensation or insurance indemnities received or to be received by the applicant for the production loss.</P> <P>(e) <E T="03">Physical loss</E>—(1) <E T="03">Amount of loss.</E> The applicant's total eligible physical loss is calculated as follows:</P> <P>(i) Add the allowable costs associated with replacing or repairing chattel covered by hazard insurance (excluding labor, machinery, equipment, or materials contributed by the applicant to repair or replace chattel);</P> <P>(ii) Add the allowable costs associated with repairing or replacing real estate, covered by hazard insurance;</P> <P>(iii) Add the value of livestock and livestock products (such valuation will be based on a national or regional valuation of species or product classification, whichever the Agency determines is more accurate);</P> <P>(iv) Add the allowable costs to restore perennials, which produce an agricultural commodity, to the stage of development the damaged perennials had obtained prior to the disaster;</P> <P>(v) Add, in the case of an applicant that is an individual, the allowable costs associated with repairing or replacing essential household contents, not to exceed $20,000; and</P> <P>(vi) Subtract any other disaster-related compensation or insurance indemnities received or to be received by the applicant for the loss or damage to the chattel or real estate.</P> <P>(2) <E T="03">Documentation.</E> In the case of physical losses associated with livestock, the applicant must have written documentation of the inventory of livestock and records of livestock product sales sufficient to allow the Agency to value such livestock or livestock products just prior to the loss.</P> </SECTION> <SECTION> <PRTPAGE P="176"/> <SECTNO>§ 764.6</SECTNO> <SUBJECT>Interest rate.</SUBJECT> <P>The interest rate applicable for an Emergency loan will be the lower of the interest rate at the time of either loan approval or loan closing and in no event shall exceed 8 percent annually.</P> </SECTION> <SECTION> <SECTNO>§ 764.7</SECTNO> <SUBJECT>Loan terms.</SUBJECT> <P>(a) <E T="03">Basis for repayment.</E> The Agency schedules repayment of Emergency loans based on the useful life of the loan security, the applicant's repayment ability, and the type of loss.</P> <P>(b) <E T="03">Minimum payment requirement.</E> The repayment schedule must include at least one payment every year.</P> <P>(c) <E T="03">Repayment of loans for annual operating expenses.</E> Emergency loans for annual operating expenses, except those expenses associated with establishing a perennial crop, must be repaid within 12 months. The Agency, however, may extend this term to not more than 18 months to accommodate the production cycle of the agricultural commodities of the farming operation.</P> <P>(d) <E T="03">Repayment of loans for production or physical losses to chattel.</E> The repayment schedule for loans for production losses or physical losses to chattel (including but not limited to assets with an expected life between 1 and 7 years) may not exceed 7 years. If necessary to improve the repayment ability of the loan and real estate security is available, the term of the loan may be extended up to a total length not to exceed 20 years.</P> <P>(e) <E T="03">Repayment of loans for physical losses to real estate.</E> The repayment schedule for loans for physical losses to real estate is based on repayment ability of the applicant and the useful life of the security, but in no case will the term of repayment exceed 40 years.</P> </SECTION> <SECTION> <SECTNO>§ 764.8</SECTNO> <SUBJECT>Repayment and security requirements.</SUBJECT> <P>(a) <E T="03">General requirements</E>—(1) <E T="03">Ability to repay.</E> The applicant must submit a feasible plan that demonstrates the applicant's ability to repay the loan. The plan also must demonstrate that the applicant will meet all other credit needs and obligations, including judgments, for which the applicant is legally responsible.</P> <P>(2) <E T="03">Sufficient equity.</E> The applicant must have sufficient equity in the security pledged for an Emergency loan to provide adequate security for the loan except as permitted in paragraph (f) of this section. The applicant must provide additional security, if available, not to exceed 150 percent of the loan amount.</P> <P>(3) <E T="03">Interests in property not owned by the applicant.</E> Interests in property not owned by the applicant (such as leases that provide a mortgageable value, water rights, easements, mineral rights, and royalties) can be offered as security for the loan and will be considered in determining whether adequate security is available.</P> <P>(b) <E T="03">Real estate loans.</E> In the case of an Emergency loan for real estate losses, the loan shall be secured at a minimum by the real estate that is being purchased, repaired, replaced, or improved with the loan funds.</P> <P>(c) <E T="03">Chattel and production loans.</E> In the case of an Emergency loan for chattel and production losses, the loan shall be secured, at a minimum, by the chattel that is being purchased, repaired, replaced, refinanced, or produced with the loan funds.</P> <P>(d) <E T="03">Agency lien position</E>—(1) <E T="03">Real estate security.</E> If real estate is pledged as security for a loan, the Agency must obtain a first lien, if available, on the real estate. When a first lien is not available, the Agency may take a junior lien under the following conditions:</P> <P>(i) The prior lien does not contain any provision that may jeopardize the Agency's interest or the applicant's ability to repay the loan to the Agency;</P> <P>(ii) Prior lienholders agree to notify the Agency of acceleration and foreclosure whenever State law or other arrangements do not require such notice; and</P> <P>(iii) The applicant must agree to obtain permission from the Agency prior to granting any additional security interests in the real estate.</P> <P>(2) <E T="03">Real estate held under a purchase contract.</E> If the real estate offered as security is held under a recorded purchase contract:</P> <P>(i) The applicant must provide a security interest in the real estate;</P> <P>(ii) The applicant and the purchase contract holder must agree in writing that any insurance proceeds received <PRTPAGE P="177"/>to compensate for real estate losses will be used only to replace or repair the damaged real estate;</P> <P>(iii) The applicant must refinance the existing purchase contract, or demonstrate that financing is not available, if an acceptable contract of sale cannot be negotiated or the purchase contract holder refuses to agree to apply all the insurance proceeds to repair or replace the damaged real estate and wants to retain some of the proceeds as an extra payment on the balance owed;</P> <P>(iv) The purchase contract must not be subject to summary cancellation on default and must not contain any provisions that are contrary to the Agency's best interests; and</P> <P>(v) The contract holder must agree in writing to notify the Agency of any breach by the purchaser, and give the Agency the option to rectify the conditions that amount to a breach within 30 days after the date the Agency receives written notice of the breach.</P> <P>(3) <E T="03">Chattel security.</E> If chattel property is pledged as security for a loan the Agency must obtain a first lien on the chattel that is being purchased, repaired, replaced, refinanced, or produced with the loan funds.</P> <P>(e) <E T="03">Same security for multiple loans.</E> The same property may be pledged as security for more than one Farm Loan Program loan.</P> <P>(f) <E T="03">Lack of adequate security.</E> When adequate security is not available because of the disaster, the loan application may be approved if the Agency determines, based on the plan required in paragraph (a)(1) of this section, that there is a reasonable assurance that the applicant has the ability to repay the loan (based on an on-going operational basis, excluding special one-time sources of income or expenses) provided:</P> <P>(1) The applicant has pledged as collateral for the loan, all available personal and business collateral, except those items listed in paragraphs (h)(1) and (h)(2) of this section;</P> <P>(2) The feasible plan, approved by the Agency, indicates the loan will be repaid based upon the applicant's production and income history and addresses applicable pricing risks through the use of marketing contracts, hedging, options, revenue insurance or similar risk management practices;</P> <P>(3) The applicant has had positive net cash farm income in at least 3 of the past 5 years; and</P> <P>(4) The applicant has given the Agency an assignment on any USDA program payments to be received.</P> <P>(g) <E T="03">Conditions for taking other assets as security</E>—(1) <E T="03">Conditions.</E> In addition to the requirements for adequate and additional security, the Agency will take a security interest in other assets (other than assets listed under the exceptions in paragraph (h) of this section), if available, when:</P> <P>(i) An applicant has non-essential assets that are not being converted to cash to reduce the loan amount; or</P> <P>(ii) The real estate security and chattel security do not provide adequate security for the loan.</P> <P>(2) <E T="03">List of other assets.</E> Other assets may include:</P> <P>(i) A pledge of real estate or chattel by a third party;</P> <P>(ii) Patents, copyrights, life insurance, stocks, other securities, and membership in cooperatives, owned by the applicant;</P> <P>(iii) Assets owned by an applicant that cannot be converted to cash without jeopardizing the farm operation; and</P> <P>(iv) Non-essential assets owned by the applicant with an aggregate value in excess of $5,000.</P> <P>(h) <E T="03">Exceptions to security requirements.</E> The Agency will not take a security interest in certain property in the following situations:</P> <P>(1) The property proposed as security has environmental contamination, restrictions, or historical impact that could impair the value or expose the Agency to potential liability;</P> <P>(2) The Agency cannot obtain a valid lien on the security;</P> <P>(3) The applicant's personal residence and appurtenances are on a parcel of land separate and apart from that real estate being used as adequate security for the loan; or</P> <P>(4) The applicant's other assets are used for farming or for essential living expenses and are not needed for security purposes, including but not limited to, subsistence livestock, cash or <PRTPAGE P="178"/>special cash collateral accounts, retirement accounts, personal vehicles, household goods, and small tools and equipment such as hand tools, power lawn mowers.</P> <P>(i) <E T="03">Requirements for security.</E> (1) For loans over $25,000, title clearance is required when real estate is taken as security.</P> <P>(2) For loans of $25,000 or less, when real estate is taken as security, a certification of ownership in real estate is required. Certification of ownership may be in the form of an affidavit which is signed by the applicant, naming the record owner of the real estate in question and listing the balances due on all known debts against the real estate. Whenever the loan approving official is uncertain of the record owner or debts against the real estate security, a title search is required.</P> <P>(j) <E T="03">Taking Indian Trust lands as security.</E> The Agency may take a lien on Indian Trust lands as security provided that the requirements of § 1943.19(a)(7) of this title are satisfied.</P> </SECTION> <SECTION> <SECTNO>§ 764.9</SECTNO> <SUBJECT>Appraisal and valuation requirements.</SUBJECT> <P>(a) <E T="03">Establishing value for real estate.</E> Real estate appraisals conducted pursuant to this part may be completed by designated appraisers or contract appraisers and shall conform to the Uniform Standards of Professional Appraisal Practice guidelines and standards in accordance with § 761.7 of this chapter.</P> <P>(b) <E T="03">Establishing value for agricultural commodities and equipment.</E> Valuations of agricultural commodities and equipment shall be established as follows:</P> <P>(1) The security value of the annual agricultural commodities production (excluding livestock) will be 100 percent of the amount loaned for annual operating and essential family household expenses, or the amount of expected crop revenue, excluding farm program and insurance payments, whichever is lower.</P> <P>(2) The value of livestock and equipment will be the market value as determined by the Agency in accordance with § 761.7 of this chapter.</P> <P>(c) <E T="03">Assets damaged by the disaster.</E> In the case of farm assets damaged by the disaster, the value of such security shall be established as of the day before the disaster occurred.</P> <CITA>[67 FR 795, Jan. 8, 2002; 67 FR 7942, Feb. 21, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 764.10</SECTNO> <SUBJECT>Insurance for loan security.</SUBJECT> <P>(a) <E T="03">Adequacy of insurance.</E> An applicant must obtain insurance, consistent with this section, equal to the lesser of the value of the security at the time of loan closing, or the principal of the loan.</P> <P>(b) <E T="03">Hazard insurance.</E> All security (except growing crops) must be covered by hazard insurance if it is readily available (<E T="03">i.e.</E> sold by insurance agents in the applicants normal trade area) and economically feasible.</P> <P>(c) <E T="03">Flood or mudslide insurance.</E> Real estate security located in flood or mudslide prone areas, as determined by the Agency, must be covered by flood or mudslide insurance.</P> <P>(d) <E T="03">Crop insurance</E>—(1) <E T="03">Requirement to obtain crop insurance.</E> Except as provided in paragraph (d)(2) of this section, prior to closing the loan, the applicant must have obtained at least the catastrophic risk protection level of crop insurance coverage for the crop during the crop year for which the loan is sought for each crop which is a basic part of an applicant's total farming operation, if such insurance is available, unless the applicant executes a written waiver of any emergency crop loss assistance with respect to such crop.</P> <P>(2) <E T="03">Exception.</E> Growing crops used to provide adequate security must be covered by crop insurance if such insurance is available.</P> <P>(e) <E T="03">Indemnities.</E> A borrower must:</P> <P>(1) List the Agency as loss payee for the insurance indemnity payment or as a beneficiary of a mortgagee loss payable clause; and</P> <P>(2) In the case of crop insurance, execute an assignment of indemnity in favor of the Agency.</P> </SECTION> <SECTION> <SECTNO>§ 764.11</SECTNO> <SUBJECT>Charges and fees.</SUBJECT> <P>The applicant must pay all filing, recording, notary, and lien search fees necessary to process and close a loan. The applicant may pay or be reimbursed for these fees from Emergency loan funds.</P> </SECTION> </PART> <PART> <PRTPAGE P="179"/> <EAR>Pt. 770</EAR> <HD SOURCE="HED">PART 770—INDIAN TRIBAL LAND ACQUISITION LOANS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>770.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>770.2</SECTNO> <SUBJECT>Abbreviations and definitions.</SUBJECT> <SECTNO>770.3</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <SECTNO>770.4</SECTNO> <SUBJECT>Authorized loan uses.</SUBJECT> <SECTNO>770.5</SECTNO> <SUBJECT>Loan limitations.</SUBJECT> <SECTNO>770.6</SECTNO> <SUBJECT>Rates and terms.</SUBJECT> <SECTNO>770.7</SECTNO> <SUBJECT>Security requirements.</SUBJECT> <SECTNO>770.8</SECTNO> <SUBJECT>Use of acquired land.</SUBJECT> <SECTNO>770.9</SECTNO> <SUBJECT>Appraisals.</SUBJECT> <SECTNO>770.10</SECTNO> <SUBJECT>Servicing.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301, 25 U.S.C. 490.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>66 FR 1567, Jan. 9, 2001, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 770.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>This part contains the Agency's policies and procedures for making and servicing loans to assist a Native American tribe or tribal corporation with the acquisition of land interests within the tribal reservation or Alaskan community.</P> </SECTION> <SECTION> <SECTNO>§ 770.2</SECTNO> <SUBJECT>Abbreviations and definitions.</SUBJECT> <P>(a) <E T="03">Abbreviations.</E> </P> <P> <E T="03">FSA</E> Farm Service Agency, an Agency of the United States Department of Agriculture, including its personnel and any successor Agency.</P> <P> <E T="03">ITLAP</E> Indian Tribal Land Acquisition Program.</P> <P> <E T="03">USPAP</E> Uniform Standards of Professional Appraisal Practice.</P> <P>(b) <E T="03">Definitions.</E> </P> <P> <E T="03">Administrator</E> is the head of the Farm Service Agency.</P> <P> <E T="03">Agency</E> is Farm Service Agency (FSA).</P> <P> <E T="03">Appraisal</E> is an appraisal for the purposes of determining the market value of land (less value of any existing improvements that pass with the land) that meets the requirements of part 761 of this chapter.</P> <P> <E T="03">Applicant</E> is a Native American tribe or tribal corporation established pursuant to the Indian Reorganization Act seeking a loan under this part.</P> <P> <E T="03">Loan funds</E> refers to money loaned under this part.</P> <P> <E T="03">Native American tribe</E> is:</P> <P>(1) An Indian tribe recognized by the Department of the Interior; or</P> <P>(2) A community in Alaska incorporated by the Department of the Interior pursuant to the Indian Reorganization Act.</P> <P> <E T="03">Rental value</E> is the potential annual rental income of a parcel of real estate as determined by a market analysis of annual rental incomes of like real estate in the subject property area.</P> <P> <E T="03">Reservation</E> is lands or interests in land within:</P> <P>(1) The Native American tribe's reservation as determined by the Department of the Interior; or</P> <P>(2) A community in Alaska incorporated by the Department of the Interior pursuant to the Indian Reorganization Act.</P> <P> <E T="03">Reserve</E> is an account established for loans approved in accordance with regulations in effect prior to February 8, 2001 which required that an amount equal to 10 percent of the annual payment be set aside each year until at least one full payment is available.</P> <P> <E T="03">Tribal corporation</E> is a corporation established pursuant to the Indian Reorganization Act.</P> <CITA>[66 FR 1567, Jan. 9, 2001, as amended at 70 FR 7167, Feb. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 770.3</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <P>An applicant must:</P> <P>(a) Submit a completed Agency application form;</P> <P>(b) Except for refinancing activities authorized in § 770.4(c), obtain an option or other acceptable purchase agreement for land to be purchased with loan funds;</P> <P>(c) Be a Native American tribe or a tribal corporation of a Native American tribe without adequate uncommitted funds, based on Generally Accepted Accounting Principles, or another financial accounting method acceptable to Secretary of Interior to acquire lands or interests therein within the Native American tribe's reservation for the use of the Native American tribe or tribal corporation or the members of either;</P> <P>(d) Be unable to obtain sufficient credit elsewhere at reasonable rates and terms for purposes established in § 770.4;</P> <P>(e) Demonstrate reasonable prospects of success in the proposed operation of the land to be purchased with funds provided under this part by providing:<PRTPAGE P="180"/> </P> <P>(1) A feasibility plan for the use of the Native American tribe's land and other enterprises and funds from any other source from which payment will be made;</P> <P>(2) A satisfactory management and repayment plan; and</P> <P>(3) A satisfactory record for paying obligations.</P> <P>(f) Unless waived by the FSA Administrator, not have any outstanding debt with any Federal Agency (other than debt under the Internal Revenue Code of 1986) which is in a delinquent status.</P> <P>(g) Not be subject to a judgment lien against the tribe's property arising out of a debt to the United States.</P> <P>(h) Have not received a write-down as provided in § 770.10(e) within the preceding 5 years.</P> <CITA>[66 FR 1567, Jan. 9, 2001, as amended at 70 FR 7167, Feb. 11, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 770.4</SECTNO> <SUBJECT>Authorized loan uses.</SUBJECT> <P>Loan funds may only be used to:</P> <P>(a) Acquire land and interests therein (including fractional interests, rights-of-way, water rights, easements, and other appurtenances (excluding improvements) that would normally pass with the land or are necessary for the proposed operation of the land) located within the Native American tribe's reservation which will be used for the benefit of the tribe or its members.</P> <P>(b) Pay costs incidental to land acquisition, including but not limited to, title clearance, legal services, land surveys, and loan closing.</P> <P>(c) Refinance non-United States Department of Agriculture preexisting debts the applicant incurred to purchase the land provided the following conditions exist:</P> <P>(1) Prior to the acquisition of such land, the applicant filed a loan application regarding the purchase of such land and received the Agency's approval for the land purchase;</P> <P>(2) The applicant could not acquire an option on such land;</P> <P>(3) The debt for such land is a short term debt with a balloon payment that cannot be paid by the applicant and that cannot be extended or modified to enable the applicant to satisfy the obligation; and</P> <P>(4) The purchase of such land is consistent with all other applicable requirements of this part.</P> <P>(d) Pay for the costs of any appraisal conducted pursuant to this part.</P> </SECTION> <SECTION> <SECTNO>§ 770.5</SECTNO> <SUBJECT>Loan limitations.</SUBJECT> <P>(a) Loan funds may not be used for any land improvement or development purposes, acquisition or repair of buildings or personal property, payment of operating costs, payment of finder's fees, or similar costs, or for any purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agriculture commodity as further established in exhibit M to subpart G of part 1940 of this title.</P> <P>(b) The amount of loan funds used to acquire land may not exceed the market value of the land (excluding the value of any improvements) as determined by a current appraisal.</P> <P>(c) Loan funds for a land purchase must be disbursed over a period not to exceed 24 months from the date of loan approval.</P> <P>(d) The sale of assets that are not renewable within the life of the loan will require a reduction in loan principal equal to the value of the assets sold.</P> </SECTION> <SECTION> <SECTNO>§ 770.6</SECTNO> <SUBJECT>Rates and terms.</SUBJECT> <P>(a) <E T="03">Term.</E> Each loan will be scheduled for repayment over a period not to exceed 40 years from the date of the note.</P> <P>(b) <E T="03">Interest rate.</E> The interest rate charged by the Agency will be the lower of the interest rate in effect at the time of the loan approval or loan closing, which is the current rate available in any FSA office. Except as provided in § 770.10(b) the interest rate will be fixed for the life of the loan.</P> </SECTION> <SECTION> <SECTNO>§ 770.7</SECTNO> <SUBJECT>Security requirements.</SUBJECT> <P>(a) The applicant will take appropriate action to obtain and provide security for the loan.</P> <P>(b) A mortgage or deed of trust on the land to be purchased by the applicant will be taken as security for a loan, except as provided in paragraph (c) of this section.</P> <P>(1) If a mortgage or deed of trust is to be obtained on trust or restricted land and the applicant's constitution or charter does not specifically authorize <PRTPAGE P="181"/>mortgage of such land, the mortgage must be authorized by tribal referendum.</P> <P>(2) All mortgages or deeds of trust on trust or restricted land must be approved by the Department of the Interior.</P> <P>(c) The Agency may take an assignment of income in lieu of a mortgage or deed of trust provided:</P> <P>(1) The Agency determines that an assignment of income provides as good or better security; and</P> <P>(2) Prior approval of the Administrator has been obtained.</P> </SECTION> <SECTION> <SECTNO>§ 770.8</SECTNO> <SUBJECT>Use of acquired land.</SUBJECT> <P>(a) <E T="03">General.</E> Subject to § 770.5(d) land acquired with loan funds, or other property serving as the security for a loan under this part, may be leased, sold, exchanged, or subject to a subordination of the Agency's interests, provided:</P> <P>(1) The Agency provides prior written approval of the action;</P> <P>(2) The Agency determines that the borrower's loan obligations to the Agency are adequately secured; and</P> <P>(3) The borrower's ability to repay the loan is not impaired.</P> <P>(b) <E T="03">Title.</E> Title to land acquired with a loan made under this part may, with the approval of the Secretary of the Interior, be taken by the United States in trust for the tribe or tribal corporation.</P> </SECTION> <SECTION> <SECTNO>§ 770.9</SECTNO> <SUBJECT>Appraisals.</SUBJECT> <P>(a) The applicant or the borrower, as appropriate, will pay the cost of any appraisal required under this part.</P> <P>(b) Appraisals must be completed in accordance with § 761.7 of this chapter.</P> </SECTION> <SECTION> <SECTNO>§ 770.10</SECTNO> <SUBJECT>Servicing.</SUBJECT> <P>(a) <E T="03">Reamortization</E>—(1) <E T="03">Eligibility.</E> The Agency may consider reamortization of a loan provided:</P> <P>(i) The borrower submits a completed Agency application form; and</P> <P>(ii) The account is delinquent due to circumstances beyond the borrower's control and cannot be brought current within 1 year; or</P> <P>(iii) The account is current, but due to circumstances beyond the borrower's control, the borrower will be unable to meet the annual loan payments.</P> <P>(2) <E T="03">Terms.</E> The term of a loan may not be extended beyond 40 years from the date of the original note.</P> <P>(i) Reamortization within the remaining term of the loan will be predicated on a projection of the tribe's operating expenses indicating the ability to meet the new payment schedule; and</P> <P>(ii) No intervening lien exists on the security for the loan which would jeopardize the Government's security priority.</P> <P>(3) <E T="03">Consolidation of notes.</E> If one or more notes are to be reamortized, consolidation of the notes is authorized.</P> <P>(b) <E T="03">Interest rate reduction.</E> The Agency may consider a reduction of the interest rate for an existing loan to the current interest rate as available from any Agency office provided:</P> <P>(1) The borrower submits a completed Agency application form;</P> <P>(2) The loan was made more than 5 years prior to the application for the interest reduction; and</P> <P>(3) The Department of the Interior and the borrower certify that the borrower meets at least one of the criteria contained in paragraph (e)(2) of this section.</P> <P>(c) <E T="03">Deferral.</E> The Agency may consider a full or partial deferral for a period not to exceed 5 years provided:</P> <P>(1) The borrower submits a completed Agency application form;</P> <P>(2) The borrower presents a plan which demonstrates that due to circumstances beyond their control, they will be unable to meet all financial commitments unless the Agency payment is deferred; and</P> <P>(3) The borrower will be able to meet all financial commitments, including the Agency payments, after the deferral period has ended.</P> <P>(d) <E T="03">Land exchanges.</E> In the cases where a borrower proposes to exchange any portion of land securing a loan for other land, title clearance and a new mortgage on the land received by the borrower in exchange, which adequately secures the unpaid principal balance of the loan, will be required unless the Agency determines any remaining land or other loan security is adequate security for the loan.<PRTPAGE P="182"/> </P> <P>(e) <E T="03">Debt write-down</E>—(1) <E T="03">Application.</E> The Agency will consider debt write-down under either the land value option or rental value option, as requested by the borrower.</P> <P>(i) The borrower must submit a completed Agency application form;</P> <P>(ii) If the borrower applies and is determined eligible for a land value and a rental value write-down, the borrower will receive a write-down based on the write-down option that provides the greatest debt reduction.</P> <P>(2) <E T="03">Eligibility.</E> To be eligible for debt write-down, the borrower (in the case of a tribal corporation, the Native American tribe of the borrower) must:</P> <P>(i) Be located in a county which is identified as a persistent poverty county by the United States Department of Agriculture, Economic Research Service pursuant to the most recent data from the Bureau of the Census; and</P> <P>(ii) Have a socio-economic condition over the immediately preceding 5 year period that meets the following two factors as certified by the Native American tribe and the Department of the Interior:</P> <P>(A) The Native American tribe has a per capita income for individual enrolled tribal members which is less than 50 percent of the Federally established poverty income rate established by the Department of Health and Human Services;</P> <P>(B) The tribal unemployment rate exceeds 50 percent;</P> <P>(3) <E T="03">Land value write-down.</E> The Agency may reduce the unpaid principal and interest balance on any loan made to the current market value of the land that was purchased with loan funds provided:</P> <P>(i) The market value of such land has declined by at least 25 percent since the land was purchased as established by a current appraisal;</P> <P>(ii) Land value decrease is not attributed to the depletion of resources contained on or under the land;</P> <P>(iii) The loan was made more than 5 years prior to the application for land value write-down;</P> <P>(iv) The loan has not previously been written down under paragraph (e)(4) of this section and has not been written down within the last 5 years under this paragraph, and</P> <P>(v) The borrower must meet the eligibility requirements of paragraphs (a)(1)(ii) or (iii) of this section.</P> <P>(4) <E T="03">Rental value write-down.</E> The Agency may reduce the unpaid principal and interest on any loan, so the annual loan payment for the remaining term of each loan equals the average of annual rental value of the land purchased by each such loan for the immediately preceding 5-year period provided:</P> <P>(i) The loan was made more than 5 years prior to the rental value writedown;</P> <P>(ii) The description of the land purchased with the loan funds and the rental values used to calculate the 5 year average annual rental value of the land have been certified by the Department of the Interior;</P> <P>(iii) The borrower provides a current market value rent study report for the land for the preceding 5 years, which identifies the average rental value. The report must be prepared by a certified general appraiser and meet the requirements of USPAP;</P> <P>(iv) The borrower has not previously received a write-down under this paragraph and has not had a loan written down within the last 5 years under paragraph (e)(3) of this section, and</P> <P>(v) The borrower must meet the eligibility requirements of paragraph (a)(1)(ii) or (iii) of this section.</P> <P>(f) <E T="03">Release of reserve.</E> Existing reserve accounts may be released for the purpose of making ITLAP loan payments or to purchase additional lands, subject to the following:</P> <P>(1) A written request is received providing details of the use of the funds;</P> <P>(2) The loan is not delinquent;</P> <P>(3) The loan adequately secured by a general assignment of tribal income.</P> <CITA>[66 FR 1567, Jan. 9, 2001; 66 FR 47877, Sept. 14, 2001, as amended at 70 FR 7167, Feb. 11, 2005]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 771</EAR> <HD SOURCE="HED">PART 771—BOLL WEEVIL ERADICATION LOAN PROGRAM</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>771.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <SECTNO>771.2</SECTNO> <SUBJECT>Abbreviations and definitions.</SUBJECT> <SECTNO>771.3</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>771.4</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <SECTNO>771.5</SECTNO> <SUBJECT>Loan purposes.</SUBJECT> <SECTNO>771.6</SECTNO> <SUBJECT>Environmental requirements.</SUBJECT> <SECTNO>771.7</SECTNO> <SUBJECT>Equal opportunity and non-discrimination requirements.<PRTPAGE P="183"/> </SUBJECT> <SECTNO>771.8</SECTNO> <SUBJECT>Other Federal, State, and local requirements.</SUBJECT> <SECTNO>771.9</SECTNO> <SUBJECT>Interest rates, terms, security requirements, and repayment.</SUBJECT> <SECTNO>771.10</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>771.11</SECTNO> <SUBJECT>Application.</SUBJECT> <SECTNO>771.12</SECTNO> <SUBJECT>Funding applications.</SUBJECT> <SECTNO>771.13</SECTNO> <SUBJECT>Loan closing.</SUBJECT> <SECTNO>771.14</SECTNO> <SUBJECT>Loan monitoring.</SUBJECT> <SECTNO>771.15</SECTNO> <SUBJECT>Loan servicing.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301; 7 U.S.C. 1989; and Pub. L. 104-180, 110 Stat. 1569.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>67 FR 59771, Sept. 24, 2002, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 771.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <P>The regulations in this part set forth the terms and conditions under which loans are made through the Boll Weevil Eradication Loan Program. The regulations in this part are applicable to applicants, borrowers, and other parties involved in the making, servicing, and liquidation of these loans. The program's objective is to assist producers and state government agencies in the eradication of boll weevils from cotton producing areas.</P> </SECTION> <SECTION> <SECTNO>§ 771.2</SECTNO> <SUBJECT>Abbreviations and definitions.</SUBJECT> <P>The following abbreviations and definitions apply to this part:</P> <P>(a) Abbreviations:</P> <P> <E T="03">APHIS</E> means the Animal and Plant Health Inspection Service of the United States Department of Agriculture, or any successor Agency.</P> <P> <E T="03">FSA</E> means the Farm Service Agency, its employees, and any successor agency.</P> <P>(b) Definitions:</P> <P> <E T="03">Extra payment</E> means a payment derived from the sale of property serving as security for a loan, such as real estate or vehicles. Proceeds from program assessments and other normal operating income, when remitted for payment on a loan, will not be considered as an extra payment.</P> <P> <E T="03">Non-profit corporation</E> means a private domestic corporation created and organized under the laws of the State(s) in which the entity will operate whose net earnings are not distributable to any private shareholder or individual, and which qualifies under the Internal Revenue Service code.</P> <P> <E T="03">Restructure</E> means to modify the terms of a loan. This may include a modification of the interest rate and/or repayment terms of the loan.</P> <P> <E T="03">Security</E> means assets pledged as collateral to assure repayment of a loan in the event of default on the loan.</P> <P> <E T="03">State organization</E> means a quasi-state run public operation exclusively established and managed by state and/or non-state employees, with all employees currently dedicated to the specific task of eliminating the boll weevil from the cotton growing area of the state.</P> </SECTION> <SECTION> <SECTNO>§ 771.3</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 771.4</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <P>(a) An eligible applicant must:</P> <P>(1) Meet all requirements prescribed by APHIS to qualify for cost-share grant funds as determined by APHIS, (FSA will accept the determination by APHIS as to an organization's qualification);</P> <P>(2) Have the appropriate charter and/or legal authority as a non-profit corporation or as a State organization specifically organized to operate the boll weevil eradication program in any State, biological, or geographic region of any State in which it operates;</P> <P>(3) Possess the legal authority to enter into contracts, including debt instruments;</P> <P>(4) Operate in an area in which producers have approved a referendum authorizing producer assessments and in which an active eradication or post-eradication program is underway or scheduled to begin no later than the fiscal year following the fiscal year in which the application is submitted;</P> <P>(5) Have the legal authority to pledge producer assessments as security for loans from FSA.</P> <P>(b) Individual producers are not eligible for loans.</P> </SECTION> <SECTION> <SECTNO>§ 771.5</SECTNO> <SUBJECT>Loan purposes.</SUBJECT> <P>(a) Loan funds may be used for any purpose directly related to boll weevil eradication activities, including, but not limited to:</P> <P>(1) Purchase or lease of supplies and equipment;</P> <P>(2) Operating expenses, including but not limited to, travel and office operations;</P> <P>(3) Salaries and benefits.<PRTPAGE P="184"/> </P> <P>(b) Loan funds may not be used to pay expenses incurred for lobbying, public relations, or related activities, or to pay interest on loans from the Agency.</P> </SECTION> <SECTION> <SECTNO>§ 771.6</SECTNO> <SUBJECT>Environmental requirements.</SUBJECT> <P>No loan will be made until all Federal and state statutory and regulatory environmental requirements have been complied with.</P> </SECTION> <SECTION> <SECTNO>§ 771.7</SECTNO> <SUBJECT>Equal opportunity and non-discrimination requirements.</SUBJECT> <P>No recipient of a boll weevil eradication loan shall directly, or through contractual or other arrangement, subject any person or cause any person to be subjected to discrimination on the basis of race, religion, color, national origin, gender, or other prohibited basis. Borrowers must comply with all applicable Federal laws and regulations regarding equal opportunity in hiring, procurement, and related matters.</P> </SECTION> <SECTION> <SECTNO>§ 771.8</SECTNO> <SUBJECT>Other Federal, State, and local requirements.</SUBJECT> <P>(a) In addition to the specific requirements in this subpart, loan applications will be coordinated with all appropriate Federal, State, and local agencies.</P> <P>(b) Borrowers are required to comply with all applicable:</P> <P>(1) Federal, State, or local laws;</P> <P>(2) Regulatory commission rules; and</P> <P>(3) Regulations which are presently in existence, or which may be later adopted including, but not limited to, those governing the following:</P> <P>(i) Borrowing money, pledging security, and raising revenues for repayment of debt;</P> <P>(ii) Accounting and financial reporting; and</P> <P>(iii) Protection of the environment.</P> </SECTION> <SECTION> <SECTNO>§ 771.9</SECTNO> <SUBJECT>Interest rates, terms, security requirements, and repayment.</SUBJECT> <P>(a) <E T="03">Interest rate.</E> The interest rate will be fixed for the term of the loan. The rate will be established by FSA, based upon the cost of Government borrowing for instruments on terms similar to that of the loan requested.</P> <P>(b) <E T="03">Term.</E> The loan term will be based upon the needs of the applicant to accomplish the objectives of the loan program as determined by FSA, but may not exceed 10 years.</P> <P>(c) <E T="03">Security requirements.</E> (1) Loans must be adequately secured as determined by FSA. FSA may require certain security, including but not limited to the following:</P> <P>(i) Assignments of assessments, taxes, levies, or other sources of revenue as authorized by State law;</P> <P>(ii) Investments and deposits of the applicant; and</P> <P>(iii) Capital assets or other property of the applicant or its members.</P> <P>(2) In those cases in which FSA and another lender will hold assignments of the same revenue as collateral, the other lender must agree to a prorated distribution of the assigned revenue. The distribution will be based upon the proportionate share of the applicant's debt the lender holds for the eradication zone from which the revenue is derived at the time of loan closing.</P> <P>(d) <E T="03">Repayment.</E> The applicant must demonstrate that income sources will be sufficient to meet the repayment requirements of the loan and pay operating expenses.</P> </SECTION> <SECTION> <SECTNO>§ 771.10</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 771.11</SECTNO> <SUBJECT>Application.</SUBJECT> <P>A complete application will consist of the following:</P> <P>(a) An application for Federal assistance (available in any FSA office);</P> <P>(b) Applicant's financial projections including a cash flow statement showing the plan for loan repayment;</P> <P>(c) Copies of the applicant's authorizing State legislation and organizational documents;</P> <P>(d) List of all directors and officers of the applicant;</P> <P>(e) Copy of the most recent audited financial statements along with updates through the most recent quarter;</P> <P>(f) Copy of the referendum used to establish the assessments and a certification from the Board of Directors that the referendum passed;</P> <P>(g) Evidence that the officers and employees authorized to disburse funds are covered by an acceptable fidelity bond;</P> <P>(h) Evidence of acceptable liability insurance policies;<PRTPAGE P="185"/> </P> <P>(i) Statement from the applicant addressing any current or pending litigation against the applicant as well as any existing judgments;</P> <P>(j) A copy of a resolution passed by the Board of Directors authorizing the officers to incur debt on behalf of the borrower;</P> <P>(k) Any other information deemed to be necessary by FSA to render a decision.</P> </SECTION> <SECTION> <SECTNO>§ 771.12</SECTNO> <SUBJECT>Funding applications.</SUBJECT> <P>Loan requests will be processed based on the date FSA receives the application. Loan approval is subject to the availability of funds. However, when multiple applications are received on the same date and available funds will not cover all applications received, applications from active eradication areas, which FSA determines to be most critical for the accomplishment of program objectives, will be funded first.</P> </SECTION> <SECTION> <SECTNO>§ 771.13</SECTNO> <SUBJECT>Loan closing.</SUBJECT> <P>(a) <E T="03">Conditions.</E> The applicant must meet all conditions specified by the loan approval official in the notification of loan approval prior to closing.</P> <P>(b) <E T="03">Loan instruments and legal documents.</E> The borrower, through its authorized representatives will execute all loan instruments and legal documents required by FSA to evidence the debt, perfect the required security interest in property and assets securing the loan, and protect the Government's interest, in accordance with applicable State and Federal laws.</P> <P>(c) <E T="03">Loan agreement.</E> A loan agreement between the borrower and FSA will be required. The agreement will set forth performance criteria and other loan requirements necessary to protect the Government's financial and programmatic interest and accomplish the objectives of the loan. Specific provisions of the agreement will be developed on a case-by-case basis to address the particular situation associated with the loan being made. However, all loan agreements will include at least the following provisions:</P> <P>(1) The borrower must submit audited financial statements to FSA at least annually;</P> <P>(2) The borrower will immediately notify FSA of any adverse actions such as:</P> <P>(i) Anticipated default on FSA debt;</P> <P>(ii) Potential recall vote of an assessment referendum; or</P> <P>(iii) Being named as a defendant in litigation;</P> <P>(3) Submission of other specific financial reports for the borrower;</P> <P>(4) The right of deferral under 7 U.S.C. 1981a; and</P> <P>(5) Applicable liquidation procedures upon default.</P> <P>(d) <E T="03">Fees.</E> The borrower will pay all fees for recording any legal instruments determined to be necessary and all notary, lien search, and similar fees incident to loan transactions. No fees will be assessed for work performed by FSA employees.</P> </SECTION> <SECTION> <SECTNO>§ 771.14</SECTNO> <SUBJECT>Loan monitoring.</SUBJECT> <P>(a) <E T="03">Annual and periodic reviews.</E> At least annually, the borrower will meet with FSA representatives to review the financial status of the borrower, assess the progress of the eradication program utilizing loan funds, and identify any potential problems or concerns.</P> <P>(b) <E T="03">Performance monitoring.</E> At any time FSA determines it necessary, the borrower must allow FSA or its representative to review the operations and financial condition of the borrower. This may include, but is not limited to, field visits, and attendance at Foundation Board meetings. Upon FSA request, a borrower must submit any financial or other information within 14 days unless the data requested is not available within that time frame.</P> </SECTION> <SECTION> <SECTNO>§ 771.15</SECTNO> <SUBJECT>Loan servicing.</SUBJECT> <P>(a) <E T="03">Advances.</E> FSA may make advances to protect its financial interests and charge the borrower's account for the amount of any such advances.</P> <P>(b) <E T="03">Payments.</E> Payments will be made to FSA as set forth in loan agreements and debt instruments. The funds from extra payments will be applied entirely to loan principal.</P> <P>(c) <E T="03">Restructuring.</E> The provisions of 7 CFR part 1951, subpart S, are not applicable to loans made under this section. However, FSA may restructure loan debts; provided:<PRTPAGE P="186"/> </P> <P>(1) The Government's interest will be protected;</P> <P>(2) The restructuring will be performed within FSA budgetary restrictions; and</P> <P>(3) The loan objectives cannot be met unless the loan is restructured.</P> <P>(d) <E T="03">Default.</E> In the event of default, FSA will take all appropriate actions to protect its interest.</P> </SECTION> </PART> <PART> <EAR>Pt. 772</EAR> <HD SOURCE="HED">PART 772—SERVICING MINOR PROGRAM LOANS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>772.1</SECTNO> <SUBJECT>Policy.</SUBJECT> <SECTNO>772.2</SECTNO> <SUBJECT>Abbreviations and definitions.</SUBJECT> <SECTNO>772.3</SECTNO> <SUBJECT>Compliance.</SUBJECT> <SECTNO>772.4</SECTNO> <SUBJECT>Environmental requirements.</SUBJECT> <SECTNO>772.5</SECTNO> <SUBJECT>Security maintenance.</SUBJECT> <SECTNO>772.6</SECTNO> <SUBJECT>Subordination of security.</SUBJECT> <SECTNO>772.7</SECTNO> <SUBJECT>Leasing minor program loan security.</SUBJECT> <SECTNO>772.8</SECTNO> <SUBJECT>Sale or exchange of security property.</SUBJECT> <SECTNO>772.9</SECTNO> <SUBJECT>Releases.</SUBJECT> <SECTNO>772.10</SECTNO> <SUBJECT>Transfer and assumption—AMP loans.</SUBJECT> <SECTNO>772.11</SECTNO> <SUBJECT>Transfer and assumption—IMP loans.</SUBJECT> <SECTNO>772.12</SECTNO> <SUBJECT>Graduation.</SUBJECT> <SECTNO>772.13</SECTNO> <SUBJECT>Delinquent account servicing.</SUBJECT> <SECTNO>772.14</SECTNO> <SUBJECT>Reamortization of AMP loans.</SUBJECT> <SECTNO>772.15</SECTNO> <SUBJECT>Protective advances.</SUBJECT> <SECTNO>772.16</SECTNO> <SUBJECT>Liquidation.</SUBJECT> <SECTNO>772.17</SECTNO> <SUBJECT>Equal Opportunity and non-discrimination requirements.</SUBJECT> <SECTNO>772.18</SECTNO> <SUBJECT>Exception authority.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301, 7 U.S.C. 1989, 25 U.S.C. 490.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 69949, Dec. 16, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 772.1</SECTNO> <SUBJECT>Policy.</SUBJECT> <P>(a) <E T="03">Purpose.</E> This part contains the Agency's policies and procedures for servicing Minor Program loans which include: Grazing Association loans, Irrigation and Drainage Association loans, and Non-Farm Enterprise and Recreation loans to individuals.</P> <P>(b) <E T="03">Appeals.</E> The regulations at 7 CFR parts 11 and 780 apply to decisions made under this part.</P> </SECTION> <SECTION> <SECTNO>§ 772.2</SECTNO> <SUBJECT>Abbreviations and Definitions.</SUBJECT> <P>(a) <E T="03">Abbreviations.</E> </P> <FP SOURCE="FP-1"> <E T="03">AMP</E>Association-Type Minor Program loan;</FP> <FP SOURCE="FP-1"> <E T="03">CFR</E>Code of Federal Regulations;</FP> <FP SOURCE="FP-1"> <E T="03">FO</E>Farm Ownership Loan;</FP> <FP SOURCE="FP-1"> <E T="03">FSA</E>Farm Service Agency;</FP> <FP SOURCE="FP-1"> <E T="03">IMP</E>Individual-Type Minor Program loan;</FP> <FP SOURCE="FP-1"> <E T="03">OL</E>Operating Loan;</FP> <FP SOURCE="FP-1"> <E T="03">USDA</E>United States Department of Agriculture.</FP> <P>(b) <E T="03">Definitions.</E> </P> <P> <E T="03">Association-Type Minor Program loans (AMP):</E> Loans to Grazing Associations and Irrigation and Drainage Associations.</P> <P> <E T="03">Entity:</E> Cooperative, corporation, partnership, joint operation, trust, or limited liability company.</P> <P> <E T="03">Graduation:</E> The requirement contained in loan documents that borrowers pay their FSA loan in full with funds received from a commercial lending source as a result of improvement in their financial condition.</P> <P> <E T="03">Individual-type Minor Program loans (IMP):</E> Non-Farm Enterprise or Recreation loans to individuals.</P> <P> <E T="03">Member:</E> Any individual who has an ownership interest in the entity which has received the Minor Program loan.</P> <P> <E T="03">Minor Program:</E> Non-Farm Enterprise, Individual Recreation, Grazing Association, or Irrigation and Drainage loan programs administered or to be administered by FSA</P> <P> <E T="03">Review official:</E> An agency employee, contractor or designee who is authorized to conduct a compliance review of a Minor Program borrower under this part.</P> </SECTION> <SECTION> <SECTNO>§ 772.3</SECTNO> <SUBJECT>Compliance.</SUBJECT> <P>(a) <E T="03">Requirements.</E> No Minor Program borrower shall directly, or through contractual or other arrangement, subject any person or cause any person to be subjected to discrimination on the basis of race, color, national origin, or disability. Borrowers must comply with all applicable Federal laws and regulations regarding equal opportunity in hiring, procurement, and related matters. AMP borrowers are subject to the nondiscrimination provisions applicable to Federally assisted programs contained in 7 CFR part 15, subparts A and C, and part 15b. IMP loans are subject to the nondiscrimination provisions applicable to federally conducted programs contained in 7 CFR parts 15d and 15e.</P> <P>(b) <E T="03">Reviews.</E> In accordance with Title VI of the Civil Rights Act of 1964, the Agency will conduct a compliance review of all Minor Program borrowers, to determine if a borrower has directly, <PRTPAGE P="187"/>or through contractual or other arrangement, subjected any person or caused any person to be subjected to discrimination on the basis of race, color, or national origin. The borrower must allow the review official access to their premises and all records necessary to carry out the compliance review as determined by the review official.</P> <P>(c) <E T="03">Frequency and timing.</E> Compliance reviews will be conducted no later than October 31 of every third year until the Minor Program loan is paid in full or otherwise satisfied.</P> <P>(d) <E T="03">Violations.</E> If a borrower refuses to provide information or access to their premises as requested by a review official during a compliance review, or is determined by the Agency to be not in compliance in accordance with this section or Departmental regulations and procedures, the Agency will service the loan in accordance with the provisions of § 772.16 of this part.</P> </SECTION> <SECTION> <SECTNO>§ 772.4</SECTNO> <SUBJECT>Environmental requirements.</SUBJECT> <P>Servicing activities such as transfers, assumptions, subordinations, sale or exchange of security property, and leasing of security will be reviewed for compliance with 7 CFR part 1940, subpart G and the exhibits to that subpart and 7 CFR part 799.</P> </SECTION> <SECTION> <SECTNO>§ 772.5</SECTNO> <SUBJECT>Security maintenance.</SUBJECT> <P>(a) <E T="03">General.</E> Borrowers are responsible for maintaining the collateral that is serving as security for their Minor Program loan in accordance with their lien instruments, security agreement and promissory note.</P> <P>(b) <E T="03">Security inspection.</E> The Agency will inspect real estate that is security for a Minor Program loan at least once every 3 years, and chattel security at least annually. More frequent security inspections may be made as determined necessary by the Agency. Borrowers will allow representatives of the Agency, or any agency of the U.S. Government, in accordance with statutes and regulations, such access to the security property as the agency determines is necessary to document compliance with the requirements of this section.</P> <P>(c) <E T="03">Violations.</E> If the Agency determines that the borrower has failed to adequately maintain security, made unapproved dispositions of security, or otherwise has placed the repayment of the Minor Program loan in jeopardy, the Agency will:</P> <P>(1) For chattel security, service the account according to 7 part 1962, subpart A. If any normal income security as defined in that subpart secures a Minor Program loan, the reporting, approval and release provisions in that subpart shall apply.</P> <P>(2) For real estate security for AMP loans, contact the Regional Office of General Counsel for advice on the appropriate servicing including liquidation if warranted.</P> <P>(3) For real estate security for IMP loans, service the account according to 7 CFR part 1965, subpart A.</P> </SECTION> <SECTION> <SECTNO>§ 772.6</SECTNO> <SUBJECT>Subordination of security.</SUBJECT> <P>(a) <E T="03">Eligibility.</E> The Agency shall grant a subordination of Minor Program loan security when the transaction will further the purposes for which the loan was made, and all of the following are met:</P> <P>(1) The loan will still be adequately secured after the subordination, or the value of the loan security will be increased by the amount of advances to be made under the terms of the subordination.</P> <P>(2) The borrower can document the ability to pay all debts including the new loan.</P> <P>(3) The action does not change the nature of the borrower's activities to the extent that they would no longer be eligible for a Minor Program loan.</P> <P>(4) The subordination is for a specific amount.</P> <P>(5) The borrower is unable, as determined by the Agency, to refinance its loan and graduate in accordance with this subpart.</P> <P>(6) The loan funds will not be used in such a way that will contribute to erosion of highly erodible land or conversion of wetlands for the production of an agricultural commodity according to 7 CFR part 1940, subpart G.</P> <P>(7) The borrower has not been convicted of planting, cultivating, growing, producing, harvesting or storing a controlled substance under Federal or state law. “Borrower,” for purposes of this subparagraph, specifically includes <PRTPAGE P="188"/>an individual or entity borrower and any member of an entity borrower. “Controlled substance,” for the purpose of this subparagraph, is defined at 21 CFR part 1308. The borrower will be ineligible for a subordination for the crop year in which the conviction occurred and the four succeeding crop years. An applicant must attest on the Agency application form that it, and its members if an entity, have not been convicted of such a crime.</P> <P>(b) <E T="03">Application.</E> To request a subordination, a Minor Program borrower must make the request in writing and provide the following:</P> <P>(1) The specific amount of debt for which a subordination is needed;</P> <P>(2) An appraisal prepared in accordance with § 761.7 of this chapter, if the request is for a subordination of more than $10,000, unless a sufficient appraisal report, as determined by the Agency, that is less than one year old, is on file with the Agency; and</P> <P>(3) Consent and subordination, as necessary, of all other creditors' security interests.</P> </SECTION> <SECTION> <SECTNO>§ 772.7</SECTNO> <SUBJECT>Leasing minor program loan security.</SUBJECT> <P>(a) <E T="03">Eligibility.</E> The Agency may consent to the borrower leasing all or a portion of security property for Minor Program loans to a third party when:</P> <P>(1) Leasing is the only feasible way to continue to operate the enterprise and is a customary practice;</P> <P>(2) The lease will not interfere with the purpose for which the loan was made;</P> <P>(3) The borrower retains ultimate responsibility for the operation, maintenance and management of the facility or service for its continued availability and use at reasonable rates and terms;</P> <P>(4) The lease prohibits amendments to the lease or subleasing arrangements without prior written approval from the Agency;</P> <P>(5) The lease terms provide that the Agency is a lienholder on the subject property and, as such, the lease is subordinate to the rights and claims of the Agency as lienholder; and</P> <P>(6) The lease is for less than 3 years and does not constitute a lease/purchase arrangement, unless the transfer and assumption provisions of this subpart are met.</P> <P>(b) <E T="03">Application.</E> The borrower must submit a written request for Agency consent to lease the property.</P> </SECTION> <SECTION> <SECTNO>§ 772.8</SECTNO> <SUBJECT>Sale or exchange of security property.</SUBJECT> <P>(a) For AMP loans.</P> <P>(1) Sale of all or a portion of the security property may be approved when all of the following conditions are met:</P> <P>(i) The property is sold for market value based on a current appraisal prepared in accordance with § 761.7 of this chapter.</P> <P>(ii) The sale will not prevent carrying out the original purpose of the loan. The borrower must execute an Assurance Agreement as prescribed by the Agency. The covenant involved will remain in effect as long as the property continues to be used for the same or similar purposes for which the loan was made. The instrument of conveyance will contain the following nondiscrimination covenant: </P> <EXTRACT> <FP>The property described herein was obtained or improved with Federal financial assistance and is subject to the non-discrimination provisions of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, and other similarly worded Federal statutes, and the regulations issued pursuant thereto that prohibit discrimination on the basis of race, color, national origin, handicap, religion, age, or sex in programs or activities receiving Federal financial assistance. Such provisions apply for as long as the property continues to be used for the same or similar purposes for which the Federal assistance was extended, or for so long as the purchaser owns it, whichever is later.</FP> </EXTRACT> <P>(iii) The remaining security for the loan is adequate or will not change after the transaction.</P> <P>(iv) Sale proceeds remaining after paying any reasonable and necessary selling expenses are applied to the Minor Program loan according to lien priority.</P> <P>(2) Exchange of all or a portion of security property for an AMP loan may be approved when:</P> <P>(i) The Agency will obtain a lien on the property acquired in the exchange;</P> <P>(ii) Property more suited to the borrower's needs related to the purposes of <PRTPAGE P="189"/>the loan is to be acquired in the exchange;</P> <P>(iii) The AMP loan will be as adequately secured after the transaction as before; and</P> <P>(iv) It is necessary to develop or enlarge the facility, improve the borrower's debt-paying ability, place the operation on a more sound financial basis or otherwise further the loan objectives and purposes, as determined by the Agency.</P> <P>(b) For IMP loans.</P> <P>(1) A sale or exchange of chattel that is serving as security is governed by 7 CFR part 1962, subpart A.</P> <P>(2) A sale or exchange of real estate that is serving as security for an IMP loan is governed by 7 CFR part 1965, subpart A.</P> <CITA>[68 FR 69949, Dec. 16, 2003, as amended at 69 FR 18741, Apr. 8, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 772.9</SECTNO> <SUBJECT>Releases.</SUBJECT> <P>(a) <E T="03">Security.</E> Minor Program liens may be released when:</P> <P>(1) The debt is paid in full;</P> <P>(2) Security property is sold for market value and sale proceeds are received and applied to the borrower's creditors according to lien priority; or</P> <P>(3) An exchange in accordance with § 772.8 has been concluded.</P> <P>(b) <E T="03">Borrower liability.</E> The Agency may release a borrower from liability when the Minor Program loan, plus all administrative collection costs and charges are paid in full. IMP borrowers who have had previous debt forgiveness on a farm loan program loan as defined in 7 CFR 1951.906, however, cannot be released from liability by FSA until the previous loss to the Agency has been repaid with interest from the date of debt forgiveness. An AMP borrower may also be released in accordance with § 772.10 in conjunction with a transfer and assumption.</P> <P>(c) <E T="03">Servicing of debt not satisfied through liquidation.</E> Balances remaining after sale or liquidation of the security will be subject to administrative offset in accordance with 7 CFR part 3, Department of Treasury Offset Program (TOP) and Treasury Cross-Servicing regulations at 31 CFR part 285 and Federal Claims Collections Standards at 31 CFR parts 900-904. Thereafter the debt settlement provisions in 7 CFR part 1956, subpart B of chapter XVIII of the Code of Federal Regulations or successor regulation apply.</P> <CITA>[68 FR 69949, Dec. 16, 2003, as amended at 69 FR 7679, Feb. 19, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 772.10</SECTNO> <SUBJECT>Transfer and assumption—AMP loans.</SUBJECT> <P>(a) <E T="03">Eligibility.</E> The Agency may approve transfers and assumptions of AMP loans when:</P> <P>(1) The present borrower is unable or unwilling to accomplish the objectives of the loan;</P> <P>(2) The transfer will not harm the Government or adversely affect the Agency's security position;</P> <P>(3) The transferee will continue with the original purpose of the loan;</P> <P>(4) The transferee will assume an amount at least equal to the present market value of the loan security;</P> <P>(5) The transferee documents the ability to pay the AMP loan debt as provided in the assumption agreement and has the legal capacity to enter into the contract;</P> <P>(6) If there is a lien or judgment against the Agency security being transferred, the transferee is subject to such claims. The transferee must document the ability to repay the claims against the land; and</P> <P>(7) If the transfer is to one or more members of the borrower's organization and there is no new member, there must not be a loss to the Government.</P> <P>(b) <E T="03">Withdrawal.</E> Withdrawal of a member and transfer of the withdrawing member's interest in the Association to a new eligible member may be approved by the Agency if all of the following conditions are met:</P> <P>(1) The entire unpaid balance of the withdrawing member's share of the AMP loan must be assumed by the new member;</P> <P>(2) In accordance with the Association's governing articles, the required number of remaining members must agree to accept any new member; and</P> <P>(3) The transfer will not adversely affect collection of the AMP loan.</P> <P>(c) <E T="03">Requesting a transfer and assumption.</E> The transferor/borrower and transferee/applicant must submit:</P> <P>(1) The written consent of any other lienholder, if applicable.<PRTPAGE P="190"/> </P> <P>(2) A current balance sheet and cash flow statement.</P> <P>(d) <E T="03">Terms.</E> The interest rate and term of the assumed AMP loan will not be changed. Any delinquent principal and interest of the AMP loan must be paid current before the transfer and assumption will be approved by the Agency.</P> <P>(e) <E T="03">Release of liability.</E> Transferors may be released from liability with respect to an AMP loan by the Agency when:</P> <P>(1) The full amount of the loan is assumed; or</P> <P>(2) Less than the full amount of the debt is assumed, and the balance remaining will be serviced in accordance with § 772.9(c).</P> </SECTION> <SECTION> <SECTNO>§ 772.11</SECTNO> <SUBJECT>Transfer and assumption—IMP loans.</SUBJECT> <P>Transfers and assumptions for IMP loans are processed in accordance with 7 CFR part 1962, subpart A, for chattel secured loans and 7 CFR part 1965, subpart A, for real estate secured loans. Any remaining transferor liability will be serviced in accordance with § 772.9(c) of this subpart.</P> </SECTION> <SECTION> <SECTNO>§ 772.12</SECTNO> <SUBJECT>Graduation.</SUBJECT> <P>(a) <E T="03">General.</E> This section only applies to Minor Program borrowers with promissory notes which contain provisions requiring graduation.</P> <P>(b) <E T="03">Graduation reviews.</E> Borrowers shall provide current financial information when requested by the Agency or its representatives to conduct graduation reviews.</P> <P>(1) AMP loans shall be reviewed at least every two years. In the year to be reviewed, each borrower must submit, at a minimum, a year-end balance sheet and cash flow projection for the current year.</P> <P>(2) All IMP borrowers classified as “commercial” or “standard” in accordance with 7 CFR part 1951, subpart F, shall be reviewed at least every 2 years. In the year to be reviewed, each borrower must submit a year-end balance sheet, actual financial performance for the most recent year, and a projected budget for the current year.</P> <P>(c) <E T="03">Criteria.</E> Borrowers must graduate from the Minor Programs as follows:</P> <P>(1) Borrowers with IMP loans that are classified as “commercial” or “standard” must apply for private financing within 30 days from the date the borrower is notified of lender interest, if an application is required by the lender. For good cause, the Agency may grant the borrower a reasonable amount of additional time to apply for refinancing.</P> <P>(2) Borrowers with AMP loans will be considered for graduation at least every two years or more frequently if the Agency determines that the borrower's financial condition has significantly improved.</P> </SECTION> <SECTION> <SECTNO>§ 772.13</SECTNO> <SUBJECT>Delinquent account servicing.</SUBJECT> <P>(a) <E T="03">AMP loans.</E> If the borrower does not make arrangements to cure the default after notice by the Agency and is not eligible for reamortization in accordance with § 772.14, the Agency will liquidate the account according to § 772.16.</P> <P>(b) <E T="03">IMP loans.</E> Delinquent IMP borrowers will be serviced according to 7 CFR part 1951, subpart S, and parts 3 and 1951, subpart C, concerning internal agency offset and referral to the Department of Treasury Offset Program and Treasury Cross-Servicing (or successor regulations).</P> </SECTION> <SECTION> <SECTNO>§ 772.14</SECTNO> <SUBJECT>Reamortization of AMP loans.</SUBJECT> <P>The Agency may approve reamortization of AMP loans provided:</P> <P>(a) There is no extension of the final maturity date of the loan;</P> <P>(b) No intervening lien exists on the security for the loan which would jeopardize the Government's security position;</P> <P>(c) If the account is delinquent, it cannot be brought current within one year and the borrower has presented a cash flow budget which demonstrates the ability to meet the proposed new payment schedule; and</P> <P>(d) If the account is current, the borrower will be unable to meet the annual loan payments due to circumstances beyond the borrower's control.</P> </SECTION> <SECTION> <SECTNO>§ 772.15</SECTNO> <SUBJECT>Protective advances.</SUBJECT> <P>(a) The Agency may approve, without regard to any loan or total indebtedness limitation, vouchers to pay costs, <PRTPAGE P="191"/>including insurance and real estate taxes, to preserve and protect the security, the lien, or the priority of the lien securing the debt owed to the Agency if the debt instrument provides that the Agency may voucher the account to protect its lien or security.</P> <P>(b) The Agency may pay protective advances only when it determines it to be in the Government's best financial interest.</P> <P>(c) Protective advances are immediately due and payable.</P> </SECTION> <SECTION> <SECTNO>§ 772.16</SECTNO> <SUBJECT>Liquidation.</SUBJECT> <P>When the Agency determines that continued servicing will not accomplish the objectives of the loan and the delinquency or financial distress cannot be cured by the options in § 772.13, or the loan is in non-monetary default, the borrower will be encouraged to dispose of the Agency security voluntarily through sale or transfer and assumption in accordance with this part. If such a transfer or voluntary sale is not carried out, the loan will be liquidated according to 7 CFR part 1955, subpart A. For AMP loans, appeal rights under 7 CFR part 11 are provided in the notice of acceleration. For IMP loans, appeal rights must be exhausted before acceleration, and the notice of acceleration is not appealable.</P> </SECTION> <SECTION> <SECTNO>§ 772.17</SECTNO> <SUBJECT>Equal opportunity and non-discrimination requirements.</SUBJECT> <P>With respect to any aspect of a credit transaction, the Agency will comply with the requirements of the Equal Credit Opportunity Act as implemented in 7 CFR 1910.2, and the Department's civil rights policy in 7 CFR part 15d.</P> </SECTION> <SECTION> <SECTNO>§ 772.18</SECTNO> <SUBJECT>Exception authority.</SUBJECT> <P>Exceptions to any requirement in this subpart can be approved in individual cases by the Administrator if application of any requirement or failure to take action would adversely affect the Government's financial interest. Any exception must be consistent with the authorizing statute and other applicable laws.</P> </SECTION> </PART> <PART> <EAR>Pt. 773</EAR> <HD SOURCE="HED">PART 773—SPECIAL APPLE LOAN PROGRAM</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>773.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <SECTNO>773.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>773.3</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>773.4-773.5</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>773.6</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <SECTNO>773.7</SECTNO> <SUBJECT>Loan uses.</SUBJECT> <SECTNO>773.8</SECTNO> <SUBJECT>Limitations.</SUBJECT> <SECTNO>773.9</SECTNO> <SUBJECT>Environmental compliance.</SUBJECT> <SECTNO>773.10</SECTNO> <SUBJECT>Other Federal, State, and local requirements.</SUBJECT> <SECTNO>773.11-773.17</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>773.18</SECTNO> <SUBJECT>Loan application.</SUBJECT> <SECTNO>773.19</SECTNO> <SUBJECT>Interest rate, terms, security requirements, and repayment.</SUBJECT> <SECTNO>773.20</SECTNO> <SUBJECT>Funding applications.</SUBJECT> <SECTNO>773.21</SECTNO> <SUBJECT>Loan decision, closing and fees.</SUBJECT> <SECTNO>773.22</SECTNO> <SUBJECT>Loan servicing.</SUBJECT> <SECTNO>773.23</SECTNO> <SUBJECT>Exception.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 106-224.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 76117, Dec. 6, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 773.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <P>This part contains the terms and conditions for loans made under the Special Apple Loan Program. These regulations are applicable to applicants, borrowers, and other parties involved in making, servicing, and liquidating these loans. The program objective is to assist producers of apples suffering from economic loss as a result of low apple prices.</P> </SECTION> <SECTION> <SECTNO>§ 773.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part, the following definitions apply:</P> <P> <E T="03">Agency</E> is the Farm Service Agency, its employees, and any successor agency.</P> <P> <E T="03">Apple producer</E> is a farmer in the United States or its territories that produced apples, on not less than 10 acres, for sale in 1999 or 2000.</P> <P> <E T="03">Applicant</E> is the individual or business entity applying for the loan.</P> <P> <E T="03">Business entity</E> is a corporation, partnership, joint operation, trust, limited liability company, or cooperative.</P> <P> <E T="03">Cash flow budget</E> is a projection listing all anticipated cash inflows (including all farm income, nonfarm income and all loan advances) and all cash outflows (including all farm and nonfarm debt service and other expenses) to be incurred by the borrower <PRTPAGE P="192"/>during the period of the budget. A cash flow budget may be completed either for a 12 month period, a typical production cycle or the life of the loan, as appropriate.</P> <P> <E T="03">Domestically owned enterprise</E> is an entity organized in the United States under the law of the state or states in which the entity operates and a majority of the entity is owned by members meeting the citizenship test.</P> <P> <E T="03">False information</E> is information provided by an applicant, borrower, or other source to the Agency which information is known by the provider to be incorrect, and was given to the Agency in order to obtain benefits for which the applicant or borrower would not otherwise have been eligible.</P> <P> <E T="03">Feasible plan</E> is a plan that demonstrates that the loan will be repaid as agreed, as determined by the Agency.</P> <P> <E T="03">Security</E> is real or personal property pledged as collateral to assure repayment of a loan in the event there is a default on the loan.</P> <P> <E T="03">USPAP</E> is Uniform Standards of Professional Appraisal Practice.</P> </SECTION> <SECTION> <SECTNO>§ 773.3</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>A loan applicant or borrower may request an appeal or review of an adverse decision made by the Agency in accordance with 7 CFR part 11.</P> </SECTION> <SECTION> <SECTNO>§§ 773.4-773.5</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 773.6</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <P>Loan applicants must meet all of the following requirements to be eligible for a Special Apple Program Loan:</P> <P>(a) The loan applicant must be an apple producer;</P> <P>(b) The loan applicant must be a citizen of the United States or an alien lawfully admitted to the United States for permanent residence under the Immigration and Nationalization Act. For a business entity applicant, the majority of the business entity must be owned by members meeting the citizenship test or, other entities that are domestically owned. Aliens must provide the appropriate Immigration and Naturalization Service forms to document their permanent residency;</P> <P>(c) The loan applicant and anyone who will execute the promissory note must possess the legal capacity to enter into contracts, including debt instruments;</P> <P>(d) At loan closing the loan applicant and anyone who will execute the promissory note must not be delinquent on any Federal debt, other than a debt under the Internal Revenue Code of 1986;</P> <P>(e) At loan closing the loan applicant and anyone who will execute the promissory note must not have any outstanding unpaid judgments obtained by the United States in any court. Such judgments do not include those filed as a result of action in the United States Tax Courts;</P> <P>(f) The loan applicant, in past or present dealings with the Agency, must not have provided the Agency with false information; and</P> <P>(g) The individual or business entity loan applicant and all entity members must have acceptable credit history demonstrated by debt repayment. A history of failure to repay past debts as they came due (including debts to the Internal Revenue Service) when the ability to repay was within their control will demonstrate unacceptable credit history. Unacceptable credit history will not include isolated instances of late payments which do not represent a pattern and were clearly beyond the applicant's control or lack of credit history.</P> </SECTION> <SECTION> <SECTNO>§ 773.7</SECTNO> <SUBJECT>Loan uses.</SUBJECT> <P>Loan funds may be used for any of the following purposes related to the production or marketing of apples:</P> <P>(a) Payment of costs associated with reorganizing a farm to improve its profitability;</P> <P>(b) Payment of annual farm operating expenses;</P> <P>(c) Purchase of farm equipment or fixtures;</P> <P>(d) Acquiring, enlarging, or leasing a farm;</P> <P>(e) Making capital improvements to a farm;</P> <P>(f) Refinancing indebtedness;</P> <P>(g) Purchase of cooperative stock for credit, production, processing or marketing purposes; or</P> <P>(h) Payment of loan closing costs.</P> </SECTION> <SECTION> <PRTPAGE P="193"/> <SECTNO>§ 773.8</SECTNO> <SUBJECT>Limitations.</SUBJECT> <P>(a) The maximum loan amount any individual or business entity may receive under the Special Apple Loan Program is limited to $500,000.</P> <P>(b) The maximum loan is further limited to $300 per acre of apple trees in production in 1999 or 2000, whichever is greater.</P> <P>(c) Loan funds may not be used to pay expenses incurred for lobbying or related activities.</P> <P>(d) Loans may not be made for any purpose which contributes to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity.</P> </SECTION> <SECTION> <SECTNO>§ 773.9</SECTNO> <SUBJECT>Environmental compliance.</SUBJECT> <P>(a) Except as otherwise specified in this section, prior to approval of any loan, an environmental evaluation will be completed by the Agency to determine if the proposed action will have any adverse impacts on the human environment and cultural resources. Loan applicants will provide all information necessary for the Agency to make its evaluation.</P> <P>(b) The following loan actions were reviewed for the purpose of compliance with the National Environmental Policy Act (NEPA), 40 CFR parts 1500 through 1508, and determined not to have a significant impact on the quality of the human environment, either individually or cumulatively. Therefore the following loan actions are categorically excluded from the requirements of an environmental evaluation:</P> <P>(1) Payment of legal costs associated with reorganizing a farm to improve its profitability as long as there will be no changes in the land's use or character;</P> <P>(2) Purchase of farm equipment which will not be affixed to a permanent mount or position;</P> <P>(3) Acquiring or leasing a farm;</P> <P>(4) Refinancing an indebtedness not greater than $30,000;</P> <P>(5) Purchase of stock in a credit association or in a cooperative which deals with the production, processing or marketing of apples; and</P> <P>(6) Payment of loan closing costs.</P> <P>(c) The loan actions listed in paragraph (b) of this section were also reviewed in accordance with section 106 of the National Historic Preservation Act (NHPA). It was determined that these loan actions are non-undertakings with no potential to affect or alter historic properties and therefore, will not require consultation with the State Historic Preservation Officer, Tribal Historic Preservation Officer, or other interested parties.</P> <P>(d) If adverse environmental impacts, either direct or indirect, are identified, the Agency will complete an environmental assessment in accordance with the Council on Environmental Quality's Regulations for Implementing the Procedural Provisions of NEPA to the extent required by law.</P> <P>(e) In order to minimize the financial risk associated with contamination of real property from hazardous waste and other environmental concerns, the Agency will complete an environmental risk evaluation of the environmental risks to the real estate collateral posed by the presence of hazardous substances and other environmental concerns.</P> <P>(1) The Agency will not accept real estate as collateral which has significant environmental risks.</P> <P>(2) If the real estate offered as collateral contains significant environmental risks, the Agency will provide the applicant with the option of properly correcting or removing the risk, or offering other non-contaminated property as collateral.</P> </SECTION> <SECTION> <SECTNO>§ 773.10</SECTNO> <SUBJECT>Other Federal, State, and local requirements.</SUBJECT> <P>Borrowers are required to comply with all applicable:</P> <P>(a) Federal, State, or local laws;</P> <P>(b) Regulatory commission rules; and</P> <P>(c) Regulations which are presently in existence, or which may be later adopted including, but not limited to, those governing the following:</P> <P>(1) Borrowing money, pledging security, and raising revenues for repayment of debt;</P> <P>(2) Accounting and financial reporting; and</P> <P>(3) Protection of the environment.</P> </SECTION> <SECTION> <SECTNO>§§ 773.11-773.17</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 773.18</SECTNO> <SUBJECT>Loan application.</SUBJECT> <P>(a) A complete application will consist of the following:<PRTPAGE P="194"/> </P> <P>(1) A completed Agency application form;</P> <P>(2) If the applicant is a business entity, any legal documents evidencing the organization and any State recognition of the entity;</P> <P>(3) Documentation of compliance with the Agency's environmental regulations contained in 7 CFR part 1940, subpart G;</P> <P>(4) A balance sheet on the applicant;</P> <P>(5) The farm's operating plan, including the projected cash flow budget reflecting production, income, expenses, and loan repayment plan;</P> <P>(6) The last 3 years of production and income and expense information;</P> <P>(7) Payment to the Agency for ordering a credit report; and</P> <P>(8) Any additional information required by the Agency to determine the eligibility of the applicant, the feasibility of the operation, or the adequacy and availability of security.</P> <P>(b) Except as required in § 773.19(e), the Agency will waive requirements for a complete application, listed in paragraphs (a)(5) and (a)(6) of this section, for requests of $30,000 or less.</P> </SECTION> <SECTION> <SECTNO>§ 773.19</SECTNO> <SUBJECT>Interest rate, terms, security requirements, and repayment.</SUBJECT> <P>(a) <E T="03">Interest rate.</E> The interest rate will be fixed for the term of the loan. The rate will be established by the Agency and available in each Agency Office, based upon the cost of Government borrowing for loans of similar maturities.</P> <P>(b) <E T="03">Terms.</E> The loan term will be for up to 3 years, based upon the useful life of the security offered.</P> <P>(c) <E T="03">Security requirements.</E> The Agency will take a lien on the following security, if available, as necessary to adequately secure the loan:</P> <P>(1) Real estate;</P> <P>(2) Chattels;</P> <P>(3) Crops;</P> <P>(4) Other assets owned by the applicant; and</P> <P>(5) Assets owned and pledged by a third party.</P> <P>(d) <E T="03">Documentation of security value.</E> (1) For loans that are for $30,000 or less, collateral value will be based on the best available, verifiable information.</P> <P>(2) For loans of greater than $30,000 where the applicant's balance sheet shows a net worth of three times the loan amount or greater, collateral value will be based on tax assessment of real estate and depreciation schedules of chattels, as applicable, less any existing liens.</P> <P>(3) For loans of greater than $30,000 where the applicant's balance sheet shows a net worth of less than three times the loan amount, collateral value will be based on an appraisal. Such appraisals must be obtained by the applicant, at the applicant's expense and acceptable to the Agency. Appraisals of real estate must be completed in accordance with USPAP.</P> <P>(e) <E T="03">Repayment.</E> (1) All loan applicants must demonstrate that the loan can be repaid.</P> <P>(2) For loans that are for $30,000 or less where the applicant's balance sheet shows a net worth of three times the loan amount or greater, repayment ability will be considered adequate without further documentation.</P> <P>(3) For loans that are for $30,000 or less where the applicant's balance sheet shows a net worth of less than three times the loan amount, repayment ability must be demonstrated using the farm's operating plan, including a projected cash flow budget based on historical performance. Such operating plan is required notwithstanding § 773.18 of this part.</P> <P>(4) For loans that are for more than $30,000, repayment ability must be demonstrated using the farm's operating plan, including a projected cash flow budget based on historical performance.</P> <P>(f) <E T="03">Creditworthiness.</E> All loan applicants must have an acceptable credit history demonstrated by debt repayment. A history of failure to repay past debts as they came due (including debts to the Internal Revenue Service) when the ability to repay was within their control will demonstrate unacceptable credit history. Unacceptable credit history will not include isolated instances of late payments which do not represent a pattern and were clearly beyond the applicant's control or lack of credit history.</P> </SECTION> <SECTION> <PRTPAGE P="195"/> <SECTNO>§ 773.20</SECTNO> <SUBJECT>Funding applications.</SUBJECT> <P>Loan requests will be funded based on the date the Agency approves the application. Loan approval is subject to the availability of funds.</P> </SECTION> <SECTION> <SECTNO>§ 773.21</SECTNO> <SUBJECT>Loan decision, closing, and fees.</SUBJECT> <P>(a) <E T="03">Loan decision.</E> (1) The Agency will approve a loan if it determines that:</P> <P>(i) The loan can be repaid;</P> <P>(ii) The proposed use of loan funds is authorized;</P> <P>(iii) The applicant has been determined eligible;</P> <P>(iv) All security requirements have been, or will be met at closing;</P> <P>(vi) All other pertinent requirements have been, or will be met at closing.</P> <P>(2) The Agency will place conditions upon loan approval as necessary to protect its interest.</P> <P>(b) <E T="03">Loan closing.</E> (1) The applicant must meet all conditions specified by the loan approval official in the notification of loan approval prior to loan closing;</P> <P>(2) There must have been no significant changes in the plan of operation or the applicant's financial condition since the loan was approved; and</P> <P>(2) The applicant will execute all loan instruments and legal documents required by the Agency to evidence the debt, perfect the required security interest in property securing the loan, and protect the Government's interests, in accordance with applicable State and Federal laws. In the case of an entity applicant, all officers or partners and any board members also will be required to execute the promissory notes as individuals.</P> <P>(c) <E T="03">Fees.</E> The applicant will pay all loan closing fees including credit report fees, fees for appraisals, fees for recording any legal instruments determined to be necessary, and all notary, lien search, and similar fees incident to loan transactions. No fees will be assessed for work performed by Agency employees.</P> </SECTION> <SECTION> <SECTNO>§ 773.22</SECTNO> <SUBJECT>Loan servicing.</SUBJECT> <P>Loans will be serviced in accordance with subpart J of part 1951, or its successor regulation, during the term of the loan. If the loan is not paid in full during this term, servicing will proceed in accordance with § 1951.468 of that part.</P> </SECTION> <SECTION> <SECTNO>§ 773.23</SECTNO> <SUBJECT>Exception.</SUBJECT> <P>The Agency may grant an exception to the security requirements of this section, if the proposed change is in the best financial interest of the Government and not inconsistent with the authorizing statute or other applicable law.</P> </SECTION> </PART> <PART> <EAR>Pt. 774</EAR> <HD SOURCE="HED">PART 774—Emergency Loan for Seed Producers Program</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>774.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <SECTNO>774.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>774.3</SECTNO> <SUBJECT>Appeals.</SUBJECT> <SECTNO>774.4-774.5</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>774.6</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <SECTNO>774.7</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>774.8</SECTNO> <SUBJECT>Limitations.</SUBJECT> <SECTNO>774.9</SECTNO> <SUBJECT>Environmental requirements.</SUBJECT> <SECTNO>774.10</SECTNO> <SUBJECT>Other Federal, State, and local requirements.</SUBJECT> <SECTNO>774.11-774.16</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>774.17</SECTNO> <SUBJECT>Loan application.</SUBJECT> <SECTNO>774.18</SECTNO> <SUBJECT>Interest rate, terms, and security requirements.</SUBJECT> <SECTNO>774.19</SECTNO> <SUBJECT>Processing applications.</SUBJECT> <SECTNO>774.20</SECTNO> <SUBJECT>Funding applications.</SUBJECT> <SECTNO>774.21</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>774.22</SECTNO> <SUBJECT>Loan closing.</SUBJECT> <SECTNO>774.23</SECTNO> <SUBJECT>Loan servicing.</SUBJECT> <SECTNO>774.24</SECTNO> <SUBJECT>Exception.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 106-224</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 76119, Dec. 6, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 774.1</SECTNO> <SUBJECT>Introduction.</SUBJECT> <P>The regulations of this part contain the terms and conditions under which loans are made under the Emergency Loan for Seed Producers Program. These regulations are applicable to applicants, borrowers, and other parties involved in making, servicing, and liquidating these loans. The program objective is to assist certain seed producers adversely affected by the bankruptcy filing of AgriBiotech.</P> </SECTION> <SECTION> <SECTNO>§ 774.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part, the following definitions apply:</P> <P> <E T="03">Agency</E> is the Farm Service Agency, its employees, and any successor agency.<PRTPAGE P="196"/> </P> <P> <E T="03">Applicant</E> is the individual or business entity applying for the loan.</P> <P> <E T="03">Business entity</E> is a corporation, partnership, joint operation, trust, limited liability company, or cooperative.</P> <P> <E T="03">Domestically owned enterprise</E> is an entity organized in the United States under the law of the state or states in which the entity operates and a majority of the entity is owned by members meeting the citizenship test.</P> <P> <E T="03">False information</E> is information provided by an applicant, borrower or other source to the Agency that the borrower knows to be incorrect, and that the borrower or other source provided in order to obtain benefits for which the borrower would not otherwise have been eligible.</P> <P> <E T="03">Seed producer</E> is a farmer that produced a 1999 crop of grass, forage, vegetable, or sorghum seed for sale to AgriBiotech under contract.</P> </SECTION> <SECTION> <SECTNO>§ 774.3</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>A loan applicant or borrower may request an appeal or review of an adverse decision made by the Agency in accordance with 7 CFR part 11.</P> </SECTION> <SECTION> <SECTNO>§§ 774.4-774.5</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 774.6</SECTNO> <SUBJECT>Eligibility requirements.</SUBJECT> <P>Loan applicants must meet all of the following requirements to be eligible under the Emergency Loan for Seed Producers Program;</P> <P>(a) The loan applicant must be a seed producer;</P> <P>(b) The individual or entity loan applicant must have a timely filed proof of claim in the Chapter XI bankruptcy proceedings involving AgriBiotech and the claim must have arisen from acontract to grow seeds in the United States;</P> <P>(c) The loan applicant must be a citizen of the United States or an alien lawfully admitted to the United States for permanent residence under the Immigration and Nationalization Act. For a business entity applicant, the majority of the business entity must be owned by members meeting the citizenship test or, other entities that are domestically owned. Aliens must provide the appropriate Immigration and Naturalization Service forms to document their permanent residency;</P> <P>(d) The loan applicant and anyone who will execute the promissory note must possess the legal capacity to enter into contracts, including debt instruments;</P> <P>(e) At loan closing, the applicant and anyone who will execute the promissory note must not be delinquent on any Federal debt, other than a debt under the Internal Revenue Code of 1986;</P> <P>(f) At loan closing, the applicant and anyone who will execute the promissory note must not have any outstanding unpaid judgments obtained by the United States in any court. Such judgments do not include those filed as a result of action in the United States Tax Courts;</P> <P>(g) The loan applicant, in past and current dealings with the Agency, must not have provided the Agency with false information.</P> </SECTION> <SECTION> <SECTNO>§ 774.7</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 774.8</SECTNO> <SUBJECT>Limitations.</SUBJECT> <P>(a) The maximum loan amount any individual or business entity may receive will be 65% of the value of the timely filed proof of claim against AgriBiotech in the bankruptcy proceeding as determined by the Agency.</P> <P>(b) Loan funds may not be used to pay expenses incurred for lobbying or related activities.</P> <P>(c) Loans may not be made for any purpose which contributes to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity.</P> </SECTION> <SECTION> <SECTNO>§ 774.9</SECTNO> <SUBJECT>Environmental requirements.</SUBJECT> <P>The loan actions in this part were reviewed for the purpose of compliance with the National Environmental Policy Act (NEPA), 40 CFR parts 1500 through 1508, and determined not to have a significant impact on the quality of the human environment, either individually or cumulatively. These loan actions are categorically excluded from the requirements of an environmental evaluation due to the fact that the loan funds would be utilized to replace operating capital the applicant would have had if AgriBiotech had not filed bankruptcy.</P> </SECTION> <SECTION> <PRTPAGE P="197"/> <SECTNO>§ 774.10</SECTNO> <SUBJECT>Other Federal, State, and local requirements.</SUBJECT> <P>Borrowers are required to comply with all applicable:</P> <P>(a) Federal, State, or local laws;</P> <P>(b) Regulatory commission rules; and</P> <P>(c) Regulations which are presently in existence, or which may be later adopted including, but not limited to, those governing the following:</P> <P>(1) Borrowing money, pledging security, and raising revenues for repayment of debt;</P> <P>(2) Accounting and financial reporting; and</P> <P>(3) Protection of the environment.</P> </SECTION> <SECTION> <SECTNO>§ 774.11-774.16</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 774.17</SECTNO> <SUBJECT>Loan application.</SUBJECT> <P>A complete application will consist of the following:</P> <P>(a) A completed Agency application form;</P> <P>(b) Proof of a bankruptcy claim in the AgriBiotech bankruptcy proceedings;</P> <P>(c) If the applicant is a business entity, any legal documents evidencing the organization and any State recognition of the entity;</P> <P>(d) Documentation of compliance with the Agency's environmental regulations contained in 7 CFR part 1940, subpart G;</P> <P>(e) A balance sheet on the applicant; and</P> <P>(f) Any other additional information the Agency needs to determine the eligibility of the applicant and the application of any Federal, State or local laws.</P> </SECTION> <SECTION> <SECTNO>§ 774.18</SECTNO> <SUBJECT>Interest rate, terms and security requirements.</SUBJECT> <P>(a) <E T="03">Interest rate.</E> (1) The interest rate on the loan will be zero percent for 36 months or until the date of settlement of, completion of, or final distribution of assets in the bankruptcy proceeding involving AgriBiotech, whichever comes first.</P> <P>(2) Thereafter interest will begin to accrue at the regular rate for an Agency Farm operating-direct loan (available in any Agency office).</P> <P>(b) <E T="03">Terms.</E> (1) Loans shall be due and payable upon the earlier of the settlement of the bankruptcy claim or 36 months from the date of the note.</P> <P>(2) However, any principal remaining thereafter will be amortized over a term of 7 years at the Farm operating-direct loan interest rate (available in any Agency office). If the loan is not paid in full during this term and default occurs, servicing will proceed in accordance with § 1951.468 of this title.</P> <P>(c) <E T="03">Security requirements.</E> (1) The Agency will require a first position pledge and assignment of the applicant's monetary claim in the AgriBiotech bankruptcy estate to secure the loan.</P> <P>(2) If the applicant has seed remaining in their possession that was produced under contract to AgriBiotech, the applicant also will provide the Agency with a first lien position on this seed. It is the responsibility of the applicant to negotiate with any existing lienholders to secure the Agency's first lien position.</P> <CITA>[65 FR 76119, Dec. 6, 2000, as amended at 68 FR 7696, Feb. 18, 2003]</CITA> </SECTION> <SECTION> <SECTNO>§ 774.19</SECTNO> <SUBJECT>Processing applications.</SUBJECT> <P>Applications will be processed until such time that funds are exhausted, or all claims have been paid and the bankruptcy involving AgriBiotech has been discharged. When all loan funds have been exhausted or the bankruptcy is discharged, no further applications will be accepted and any pending applications will be considered withdrawn.</P> </SECTION> <SECTION> <SECTNO>§ 774.20</SECTNO> <SUBJECT>Funding applications.</SUBJECT> <P>Loan requests will be funded based on the date the Agency approves an application. Loan approval is subject to the availability of funds.</P> </SECTION> <SECTION> <SECTNO>§ 774.21</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 774.22</SECTNO> <SUBJECT>Loan closing.</SUBJECT> <P>(a) <E T="03">Conditions.</E> The applicant must meet all conditions specified by the loan approval official in the notification of loan approval prior to closing.</P> <P>(b) <E T="03">Loan instruments and legal documents.</E> The applicant will execute all loan instruments and legal documents required by the Agency to evidence the debt, perfect the required security interest in the bankruptcy claim, and protect the Government's interest, in <PRTPAGE P="198"/>accordance with applicable State and Federal laws. In the case of an entity applicant, all officers or partners and any board members also will be required to execute the promissory notes as individuals.</P> <P>(c) <E T="03">Fees.</E> The applicant will pay all loan closing fees for recording any legal instruments determined to be necessary and all notary, lien search, and similar fees incident to loan transactions. No fees will be assessed for work performed by Agency employees.</P> </SECTION> <SECTION> <SECTNO>§ 774.23</SECTNO> <SUBJECT>Loan servicing.</SUBJECT> <P>Loans will be serviced in accordance with subpart J of part 1951 of this title, or its successor regulation. If the loan is not repaid as agreed and default occurs, servicing will proceed in accordance with section 1951.468 of that part.</P> </SECTION> <SECTION> <SECTNO>§ 774.24</SECTNO> <SUBJECT>Exception.</SUBJECT> <P>The Agency may grant an exception to any of the requirements of this section, if the proposed change is in the best financial interest of the Government and not inconsistent with the authorizing statute or other applicable law.</P> </SECTION> </PART> <PART> <EAR>Pt. 780</EAR> <HD SOURCE="HED">PART 780—APPEAL REGULATIONS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>780.1</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>780.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>780.3</SECTNO> <SUBJECT>Reservations of authority.</SUBJECT> <SECTNO>780.4</SECTNO> <SUBJECT>Applicability.</SUBJECT> <SECTNO>780.5</SECTNO> <SUBJECT>Decisions that are not appealable.</SUBJECT> <SECTNO>780.6</SECTNO> <SUBJECT>Appeal procedures available when a decision is appealable.</SUBJECT> <SECTNO>780.7</SECTNO> <SUBJECT>Reconsideration.</SUBJECT> <SECTNO>780.8</SECTNO> <SUBJECT>County committee appeals.</SUBJECT> <SECTNO>780.9</SECTNO> <SUBJECT>Mediation.</SUBJECT> <SECTNO>780.10</SECTNO> <SUBJECT>State committee appeals.</SUBJECT> <SECTNO>780.11</SECTNO> <SUBJECT>Appeals of NRCS determinations.</SUBJECT> <SECTNO>780.12</SECTNO> <SUBJECT>Appeals of penalties assessed under the Agricultural Foreign Investment Disclosure Act of 1978.</SUBJECT> <SECTNO>780.13</SECTNO> <SUBJECT>Verbatim transcripts.</SUBJECT> <SECTNO>780.14</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>780.15</SECTNO> <SUBJECT>Time limitations.</SUBJECT> <SECTNO>780.16</SECTNO> <SUBJECT>Implementation of final agency decisions.</SUBJECT> <SECTNO>780.17</SECTNO> <SUBJECT>Judicial review.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301 and 574; 7 U.S.C. 6995; 15 U.S.C. 714b and 714c; 16 U.S.C. 590h.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>70 FR 43266, July 27, 2005, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 780.1</SECTNO> <SUBJECT>General.</SUBJECT> <P>This part sets forth rules applicable to appealability reviews, reconsiderations, appeals and alternative dispute resolution procedures comprising in aggregate the informal appeals process of FSA. FSA will apply these rules to facilitate and expedite participants' submissions and FSA reviews of documentary and other evidence material to resolution of disputes arising under agency program regulations.</P> </SECTION> <SECTION> <SECTNO>§ 780.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For purposes of this part:</P> <P> <E T="03">1994 Act</E> means the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354).</P> <P> <E T="03">Adverse decision</E> means a program decision by an employee, officer, or committee of FSA that is adverse to the participant. The term includes any denial of program participation, benefits, written agreements, eligibility, etc., that results in a participant receiving less funds than the participant believes should have been paid or not receiving a program benefit to which the participant believes the participant was entitled.</P> <P> <E T="03">Agency</E> means FSA and its county and State committees and their personnel, CCC, NRCS, and any other agency or office of the Department which the Secretary may designate, or any successor agency.</P> <P> <E T="03">Agency record</E> means all documents and materials maintained by FSA that are related to the adverse decision under review that are compiled and reviewed by the decision-maker or that are compiled in the record provided to the next level reviewing authority.</P> <P> <E T="03">Appeal</E> means a written request by a participant asking the next level reviewing authority within FSA to review a decision. However, depending on the context, the term may also refer to a request for review by NAD.</P> <P> <E T="03">Appealability review</E> means review of a decision-maker's determination that a decision is not appealable under this part. That decision is, however, subject to review according to § 780.5 or 7 CFR part 11 to determine whether the decision involves a factual dispute that is appealable or is, instead, an attempt to challenge generally applicable program <PRTPAGE P="199"/>policies, provisions, regulations, or statutes that were not appealable.</P> <P> <E T="03">Appellant</E> means any participant who appeals or requests reconsideration or mediation of an adverse decision in accordance with this part or 7 CFR part 11.</P> <P> <E T="03">Authorized representative</E> means a person who has obtained a Privacy Act waiver and is authorized in writing by a participant to act for the participant in a reconsideration, mediation, or appeal.</P> <P> <E T="03">CCC</E> means the Commodity Credit Corporation, a wholly owned Government corporation within USDA.</P> <P> <E T="03">Certified State</E> means, in connection with mediation, a State with a mediation program, approved by the Secretary, that meets the requirements of 7 CFR part 785.</P> <P> <E T="03">Confidential mediation</E> means a mediation process in which neither the mediator nor parties participating in mediation will disclose to any person oral or written communications provided to the mediator in confidence, except as allowed by 5 U.S.C. 574 or 7 CFR part 785.</P> <P> <E T="03">County committee</E> means an FSA county or area committee established in accordance with section 8(b) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)).</P> <P> <E T="03">Determination of NRCS</E> means a decision by NRCS made pursuant to Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 <E T="03">et seq.</E>), as amended.</P> <P> <E T="03">FSA</E> means the Farm Service Agency, an agency within USDA.</P> <P> <E T="03">Final decision</E> means a program decision rendered by an employee or officer of FSA pursuant to delegated authority, or by the county or State committee upon written request of a participant. A decision that is otherwise final shall remain final unless the decision is timely appealed to the State committee or NAD. A decision of FSA made by personnel subordinate to the county committee is considered “final” for the purpose of appeal to NAD only after that decision has been appealed to the county committee under the provisions of this part.</P> <P> <E T="03">Hearing</E> means an informal proceeding on an appeal to afford a participant opportunity to present testimony, documentary evidence, or both to show why an adverse decision is in error and why the adverse decision should be reversed or modified.</P> <P> <E T="03">Implement</E> means the taking of action by FSA, NRCS, or CCC that is necessary to effectuate fully and promptly a final decision.</P> <P> <E T="03">Mediation</E> means a technique for resolution of disputes in which a mediator assists disputing parties in voluntarily reaching mutually agreeable settlement of issues within the laws, regulations, and the agency's generally applicable program policies and procedures, but in which the mediator has no authoritative decision making power.</P> <P> <E T="03">Mediator</E> means a neutral individual who functions specifically to aid the parties in a dispute during a mediation process.</P> <P> <E T="03">NAD</E> means the USDA National Appeals Division established pursuant to the 1994 Act.</P> <P> <E T="03">NAD rules</E> means the NAD rules of procedure published at 7 CFR part 11, implementing title II, subtitle H of the 1994 Act.</P> <P> <E T="03">Non-certified State</E> means a State that is not approved to participate in the certified mediation program under 7 CFR part 785, or any successor regulation.</P> <P> <E T="03">NRCS</E> means the Natural Resources Conservation Service of USDA.</P> <P> <E T="03">Participant</E> means any individual or entity who has applied for, or whose right to participate in or receive, a payment, loan, loan guarantee, or other benefit in accordance with any program of FSA to which the regulations in this part apply is affected by a decision of FSA. The term includes anyone meeting this definition regardless of whether, in the particular proceeding, the participant is an appellant or a third party respondent. The term does not include individuals or entities whose claim(s) arise under the programs excluded in the definition of “participant” published at 7 CFR 11.1.</P> <P> <E T="03">Qualified mediator</E> means a mediator who meets the training requirements established by State law in the State in which mediation services will be provided or, where a State has no law prescribing mediator qualifications, an individual who has attended a minimum of 40 hours of core mediator knowledge and skills training and, to <PRTPAGE P="200"/>remain in a qualified mediator status, completes a minimum of 20 hours of additional training or education during each 2-year period. Such training or education must be approved by USDA, by an accredited college or university, or by one of the following organizations: State Bar of a qualifying State, a State mediation association, a State approved mediation program, or a society of dispute resolution professionals.</P> <P> <E T="03">Reconsideration</E> means a subsequent consideration of a program decision by the same level of decision-maker or reviewing authority.</P> <P> <E T="03">Reviewing authority</E> means a person or committee assigned the responsibility of making a decision on reconsideration or an appeal filed by a participant in accordance with this part.</P> <P> <E T="03">State committee</E> means an FSA State committee established in accordance with Section 8(b) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)) including, where appropriate, the Director of the Caribbean Area FSA office for Puerto Rico and the Virgin Islands.</P> <P> <E T="03">State Conservationist</E> means the NRCS official in charge of NRCS operations within a State, as set forth in part 600 of this title.</P> <P> <E T="03">State Executive Director</E> means the executive director of an FSA State office with administrative responsibility for a FSA State office as established under the Reorganization Act.</P> <P> <E T="03">USDA</E> means the U.S. Department of Agriculture.</P> <P> <E T="03">Verbatim transcript</E> means an official, written record of proceedings in an appeal hearing or reconsideration of an adverse decision appealable under this part.</P> </SECTION> <SECTION> <SECTNO>§ 780.3</SECTNO> <SUBJECT>Reservations of authority.</SUBJECT> <P>(a) Representatives of FSA and CCC may correct all errors in data entered on program contracts, loan agreements, and other program documents and the results of the computations or calculations made pursuant to the contract or agreement. FSA and CCC will furnish appropriate notice of such corrections when corrections are deemed necessary.</P> <P>(b) Nothing contained in this part shall preclude the Secretary, or the Administrator of FSA, Executive Vice President of CCC, the Chief of NRCS, if applicable, or a designee, from determining at any time any question arising under the programs within their respective authority or from reversing or modifying any decision made by a subordinate employee of FSA or its county and State committees, or CCC.</P> </SECTION> <SECTION> <SECTNO>§ 780.4</SECTNO> <SUBJECT>Applicability.</SUBJECT> <P>(a)(1) Except as provided in other regulations, this part applies to decisions made under programs and by agencies, as set forth herein:</P> <P>(i) Decisions in programs administered by FSA to make, guarantee or service farm loans set forth in chapters VII and XVIII of this title relating to farm loan programs;</P> <P>(ii) Decisions in those domestic programs administered by FSA on behalf of CCC through State and county committees, or itself, which are generally set forth in chapters VII and XIV of this title, or in part VII relating to conservation or commodities;</P> <P>(iii) Appeals from adverse decisions, including technical determinations, made by NRCS under title XII of the Food Security Act of 1985, as amended;</P> <P>(iv) Penalties assessed by FSA under the Agricultural Foreign Investment Disclosure Act of 1978, 5 U.S.C. 501 <E T="03">et seq.</E>;</P> <P>(v) Decisions on equitable relief made by a State Executive Director or State Conservationist pursuant to section 1613 of the Farm Security and Rural Investment Act of 2002, Pub. L. 107-171; and</P> <P>(vi) Other programs to which this part is made applicable by specific program regulations or notices in the <E T="04">Federal Register</E>.</P> <P>(2) The procedures contained in this part may not be used to seek review of statutes or regulations issued under Federal law or review of FSA's generally applicable interpretations of such laws and regulations.</P> <P>(3) For covered programs, this part is applicable to any decision made by an employee of FSA or of its State and county committees, CCC, the personnel of FSA, or CCC, and by the officials of NRCS to the extent otherwise provided in this part, and as otherwise may be provided in individual program requirements or by the Secretary.<PRTPAGE P="201"/> </P> <P>(b) With respect to matters identified in paragraph (a) of this section, participants may request appealability review, reconsideration, mediation, or appeal under the provisions of this part, of decisions made with respect to:</P> <P>(1) Denial of participation in a program;</P> <P>(2) Compliance with program requirements;</P> <P>(3) Issuance of payments or other program benefits to a participant in a program; and</P> <P>(4) Determinations under Title XII of the Food Security Act of 1985, as amended, made by NRCS.</P> <P>(c) Only a participant directly affected by a decision may seek administrative review under § 780.5(c).</P> </SECTION> <SECTION> <SECTNO>§ 780.5</SECTNO> <SUBJECT>Decisions that are not appealable.</SUBJECT> <P>(a) Decisions that are not appealable under this part shall include the following:</P> <P>(1) Any general program provision or program policy or any statutory or regulatory requirement that is applicable to similarly situated participants;</P> <P>(2) Mathematical formulas established under a statute or program regulation and decisions based solely on the application of those formulas;</P> <P>(3) Decisions made pursuant to statutory provisions that expressly make agency decisions final or their implementing regulations;</P> <P>(4) Decisions on equitable relief made by a State Executive Director or State Conservationist pursuant to Section 1613 of the Farm Security and Rural Investment Act of 2002, Pub. L. 107-171;</P> <P>(5) Decisions of other Federal or State agencies;</P> <P>(6) Requirements and conditions designated by law to be developed by agencies other than FSA.</P> <P>(7) Disapprovals or denials because of a lack of funding.</P> <P>(8) Decisions made by the Administrator or a Deputy Administrator.</P> <P>(b) A participant directly affected by an adverse decision that is determined not to be subject to appeal under this part may request an appealability review of the determination by the State Executive Director of the State from which the underlying decision arose in accordance with § 780.15.</P> <P>(c) Decisions that FSA renders under this part may be reviewed by NAD under part 11 of this title to the extent otherwise allowed by NAD under its rules and procedures. An appealability determination of the State Executive Director in an administrative review is considered by FSA to be a new decision.</P> </SECTION> <SECTION> <SECTNO>§ 780.6</SECTNO> <SUBJECT>Appeal procedures available when a decision is appealable.</SUBJECT> <P>(a) For covered programs administered by FSA for CCC, the following procedures are available:</P> <P>(1) Appeal to the county committee of decisions of county committee subordinates;</P> <P>(2) Reconsideration by the county committee;</P> <P>(3) Appeal to the State committee;</P> <P>(4) Reconsideration by the State committee;</P> <P>(5) Appeal to NAD;</P> <P>(6) Mediation under guidelines specified in § 780.9.</P> <P>(b) For decisions in agricultural credit programs administered by FSA, the following procedures are available:</P> <P>(1) Reconsideration under § 780.7;</P> <P>(2) Mediation under § 780.9;</P> <P>(3) Appeal to NAD.</P> <P>(c) For programs and regulatory requirements under Title XII of the Food Security Act of 1985, as amended, to the extent not covered by paragraph (a) of this section, the following procedures are available:</P> <P>(1) Appeal to the county committee;</P> <P>(2) Appeal to the State committee;</P> <P>(3) Mediation under § 780.9;</P> <P>(4) Appeal to NAD.</P> </SECTION> <SECTION> <SECTNO>§ 780.7</SECTNO> <SUBJECT>Reconsideration.</SUBJECT> <P>(a) A request for reconsideration under this part must be submitted in writing by a participant or by a participant's authorized representative and addressed to the FSA decision maker as may be instructed in the adverse decision notification.</P> <P>(b) A participant's right to request reconsideration is waived if, before requesting reconsideration, a participant:</P> <P>(1) Has requested and begun mediation of the adverse decision;<PRTPAGE P="202"/> </P> <P>(2) Has appealed the adverse decision to a higher reviewing authority in FSA; or</P> <P>(3) Has appealed to NAD.</P> <P>(c) Provided a participant has not waived the right to request reconsideration, FSA will consider a request for reconsideration of an adverse decision under these rules except when a request concerns a determination of NRCS appealable under the procedures in § 780.11, the decision has been mediated, the decision has previously been reconsidered, or the decision-maker is the Administrator, Deputy Administrator, or other FSA official outside FSA's informal appeals process.</P> <P>(d) A request for reconsideration will be deemed withdrawn if a participant requests mediation or appeals to a higher reviewing authority within FSA or requests an appeal by NAD before a request for reconsideration has been acted upon.</P> <P>(e) The Federal Rules of Evidence do not apply to reconsiderations. Proceedings may be confined to presentations of evidence to material facts, and evidence or questions that are irrelevant, unduly repetitious, or otherwise inappropriate may be excluded.</P> <P>(f) The official decision on reconsideration will be the decision letter that is issued following disposition of the reconsideration request.</P> <P>(g) A decision on reconsideration is a new decision that restarts applicable time limitations periods under § 780.15 and part 11 of this title.</P> </SECTION> <SECTION> <SECTNO>§ 780.8</SECTNO> <SUBJECT>County committee appeals.</SUBJECT> <P>(a) A request for appeal to a county committee concerning a decision of a subordinate of the county committee must be submitted by a participant or by a participant's authorized representative in writing and must be addressed to the office in which the subordinate is employed.</P> <P>(b) The Federal Rules of Evidence do not apply to appeals to a county committee. However, a county committee may confine presentations of evidence to material facts and may exclude evidence or questions that are irrelevant, unduly repetitious, or otherwise inappropriate.</P> <P>(c) The official county committee decision on an appeal will be the decision letter that is issued following disposition of the appeal.</P> <P>(d) Deliberations shall be in confidence except to the extent that a county committee may request the assistance of county committee or FSA employees during deliberations.</P> </SECTION> <SECTION> <SECTNO>§ 780.9</SECTNO> <SUBJECT>Mediation.</SUBJECT> <P>(a) Any request for mediation must be submitted after issuance of an adverse decision but before any hearing in an appeal of the adverse decision to NAD.</P> <P>(b) An adverse decision and any particular issues of fact material to an adverse decision may be mediated only once:</P> <P>(1) If resolution of an adverse decision is not achieved in mediation, a participant may exercise any remaining appeal rights under this part or appeal to NAD in accordance with part 11 of this title and NAD procedures.</P> <P>(2) If an adverse decision is modified as a result of mediation, a participant may exercise any remaining appeal rights as to the modified decision under this part or appeal to NAD, unless such appeal rights have been waived pursuant to agreement in the mediation.</P> <P>(c) Any agreement reached during, or as a result of, the mediation process shall conform to the statutory and regulatory provisions governing the program and FSA's generally applicable interpretation of those statutes and regulatory provisions.</P> <P>(d) FSA will participate in mediation in good faith and to do so will take steps that include the following:</P> <P>(1) Designating a representative in the mediation;</P> <P>(2) Instructing the representative that any agreement reached during, or as a result of, the mediation process must conform to the statutes, regulations, and FSA's generally applicable interpretations of statutes and regulations governing the program;</P> <P>(3) Assisting as necessary in making pertinent records available for review and discussion during the mediation; and</P> <P>(4) Directing the representative to forward any written agreement proposed in mediation to the appropriate FSA official for approval.<PRTPAGE P="203"/> </P> <P>(e) Mediations will be treated in a confidential manner consistent with the purposes of the mediation.</P> <P>(f) For requests for mediation in a Certified State, if the factual issues implicated in an adverse decision have not previously been mediated, notice to a participant of an adverse decision will include notice of the opportunity for mediation, including a mailing address and facsimile number, if available, that the participant may use to submit a written request for mediation.</P> <P>(1) If the participant desires mediation, the participant must request mediation in writing by contacting the certified mediation program or such other contact as may be designated by FSA in an adverse decision letter. The request for mediation must include a copy of the adverse decision to be mediated.</P> <P>(2) Participants in mediation may be required to pay fees established by the mediation program.</P> <P>(3) A listing of certified State mediation programs and means for contact may be found on the FSA Web site at <E T="03">http://www.udsa.gov/fsa/dispute-mediation.htm.</E> </P> <P>(g) For requests for mediation in a Non-certified State, if the factual issues implicated in an adverse decision have not previously been mediated, notice to a participant of an adverse decision will, as appropriate, include notice of the opportunity for mediation, including the mailing address of the State Executive Director and a facsimile number, if available, that the participant may use to submit a written request for mediation.</P> <P>(1) It is the duty of the participant to contact the State Executive Director in writing to request mediation. The request for mediation must include a copy of the adverse decision to be mediated.</P> <P>(2) If resources are available for mediation, the State Executive Director will select a qualified mediator and provide written notice to the participant that mediation is available and the fees that the participant will incur for mediation.</P> <P>(3) If the participant accepts such mediation, FSA may give notice of the mediation to interested parties and third parties whose interests are known to FSA.</P> <P>(h) Mediation will be considered to be at an end on that date set out in writing by the mediator or mediation program, as applicable, or when the participant receives written notice from the State Executive Director that the State Executive Director believes the mediation is at an impasse, whichever is earlier.</P> <P>(i) To provide for mediator impartiality:</P> <P>(1) No person shall be designated as mediator in an adverse program dispute who has previously served as an advocate or representative for any party in the mediation.</P> <P>(2) As a condition of retention to mediate in an adverse program dispute under this part, the mediator shall agree not to serve thereafter as an advocate or representative for a participant or party in any other proceeding arising from or related to the mediated dispute, including, without limitation, representation of a mediation participant before an administrative appeals entity of USDA, or any other Federal Government department.</P> </SECTION> <SECTION> <SECTNO>§ 780.10</SECTNO> <SUBJECT>State committee appeals.</SUBJECT> <P>(a) A request for appeal to the State committee from a decision of a county committee must be submitted by a participant or by a participant's authorized representative in writing and addressed to the State Executive Director.</P> <P>(b) A participant's right to appeal a decision to a State committee is waived if a participant has appealed the adverse decision to NAD before requesting an appeal to the State Committee.</P> <P>(c) If a participant requests mediation or requests an appeal to NAD before a request for an appeal to the State Committee has been acted upon, the appeal to the State Committee will be deemed withdrawn.</P> <P>(d) The Federal Rules of Evidence do not apply in appeals to a State committee. Notwithstanding, a State committee may confine presentations of evidence to material facts and exclude evidence or questions as irrelevant, unduly repetitious, or otherwise inappropriate.<PRTPAGE P="204"/> </P> <P>(e) The official record of a State committee decision on an appeal will be the decision letter that is issued following disposition of the appeal.</P> <P>(f) Deliberations shall be in confidence except to the extent that a State committee may request the assistance of FSA employees during deliberations.</P> </SECTION> <SECTION> <SECTNO>§ 780.11</SECTNO> <SUBJECT>Appeals of NRCS determinations.</SUBJECT> <P>(a) Notwithstanding any other provision of this part, a determination of NRCS issued to a participant pursuant to Title XII of the Food Security Act of 1985, as amended, including a wetland determination, may be appealed to the county committee in accordance with the procedures in this part.</P> <P>(b) If the county committee hears the appeal and believes that the challenge to the NRCS determination is not frivolous, the county committee shall refer the case with its findings on other issues to the NRCS State Conservationist to review the determination, or may make such a referral in advance of resolving other issues.</P> <P>(c) A decision of the county committee not to refer the case with its findings to the NRCS State Conservationist may be appealed to the State Committee.</P> <P>(d) The county or State committee decision must incorporate, and be based upon, the results of the NRCS State Conservationist's review and subsequent determination.</P> </SECTION> <SECTION> <SECTNO>§ 780.12</SECTNO> <SUBJECT>Appeals of penalties assessed under the Agricultural Foreign Investment Disclosure Act of 1978.</SUBJECT> <P>(a) Requests for appeals of penalties assessed under the Agricultural Foreign Investment Disclosure Act of 1978 must be addressed to: Administrator, Farm Service Agency, Stop 0572, 1400 Independence Avenue, SW., Washington, DC 20250-0572.</P> <P>(b) Decisions in appeals under this section are not subject to reconsideration and are administratively final.</P> </SECTION> <SECTION> <SECTNO>§ 780.13</SECTNO> <SUBJECT>Verbatim transcripts.</SUBJECT> <P>(a) Appellants and their representatives are precluded from making any electronic recording of any portion of a hearing or other proceeding conducted in accordance with this part. Appellants interested in obtaining an official recording of a hearing or other proceeding may request a verbatim transcript in accordance with paragraph (b) of this section.</P> <P>(b) Any party to an appeal or request for reconsideration under this part may request that a verbatim transcript be made of the hearing proceedings and that such transcript be made the official record of the hearing. The party requesting a verbatim transcript shall pay for the transcription service, provide a copy of the transcript to FSA free of charge, and allow any other party in the proceeding desiring to purchase a copy of the transcript to order it from the transcription service.</P> </SECTION> <SECTION> <SECTNO>§ 780.14</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 780.15</SECTNO> <SUBJECT>Time limitations.</SUBJECT> <P>(a) To the extent practicable, no later than 10 business days after an agency decision maker renders an adverse decision that affects a participant, FSA will provide the participant written notice of the adverse decision and available appeal rights.</P> <P>(b) A participant requesting an appealability review by the State Executive Director of an agency decision made at the county, area, district or State level that is otherwise determined by FSA not to be appealable must submit a written request for an appealability review to the State Executive Director that is received no later than 30 calendar days from the date a participant receives written notice of the decision.</P> <P>(c) A participant requesting reconsideration, mediation or appeal must submit a written request as instructed in the notice of decision that is received no later than 30 calendar days from the date a participant receives written notice of the decision.</P> <P>(d) Notwithstanding the time limits in paragraphs (b) and (c) of this section, a request for an appealability review, reconsideration, or appeal may be accepted if, in the judgment of the reviewing authority with whom such request is filed, exceptional circumstances warrant such action. A participant does not have the right to see an exception under this paragraph. <PRTPAGE P="205"/>FSA's refusal to accept an untimely request is not appealable.</P> <P>(e) Decisions appealable under this part are final unless review options available under this part or part 11 are timely exercised.</P> <P>(1) Whenever the final date for any requirement of this part falls on a Saturday, Sunday, Federal holiday, or other day on which the pertinent FSA office is not open for the transaction of business during normal working hours, the time for submission of a request will be extended to the close of business on the next working day.</P> <P>(2) The date when an adverse decision or other notice pursuant to these rules is deemed received is the earlier of physical delivery by hand, by facsimile with electronic confirmation of receipt, actual stamped record of receipt on a transmitted document, or 7 calendar days following deposit for delivery by regular mail.</P> </SECTION> <SECTION> <SECTNO>§ 780.16</SECTNO> <SUBJECT>Implementation of final agency decisions.</SUBJECT> <P>To the extent practicable, no later than 30 calendar days after an agency decision becomes a final administrative decision of USDA, FSA will implement the decision.</P> </SECTION> <SECTION> <SECTNO>§ 780.17</SECTNO> <SUBJECT>Judicial review.</SUBJECT> <P>(a) Decisions of the Administrator in appeals under this part from Agriculture Foreign Investment Disclosure Act penalties are administratively final decisions of USDA.</P> <P>(b) The decision of a State Executive Director or State Conservationist on equitable relief made under § 718.307 of this title is administratively final and also not subject to judicial review.</P> </SECTION> </PART> <PART> <EAR>Pt. 781</EAR> <HD SOURCE="HED">PART 781—DISCLOSURE OF FOREIGN INVESTMENT IN AGRICULTURAL LAND</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>781.1</SECTNO> <SUBJECT>General.</SUBJECT> <SECTNO>781.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>781.3</SECTNO> <SUBJECT>Reporting requirements.</SUBJECT> <SECTNO>781.4</SECTNO> <SUBJECT>Assessment of penalties.</SUBJECT> <SECTNO>781.5</SECTNO> <SUBJECT>Penalty review procedure.</SUBJECT> <SECTNO>781.6</SECTNO> <SUBJECT>Paperwork Reduction Act assigned number.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Sec. 1-10, 92 Stat. 1266 (7 U.S.C. 3501 <E T="03">et seq.</E>).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>49 FR 35074, Sept. 6, 1984, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 781.1</SECTNO> <SUBJECT>General.</SUBJECT> <P>The purpose of these regulations is to set forth the requirements designed to implement the Agricultural Foreign Investment Disclosure Act of 1978. The regulations require that a foreign person who acquires, disposes of, or holds an interest in United States agricultural land shall disclose such transactions and holdings to the Secretary of Agriculture. In particular, the regulations establish a system for the collection of information by the Agricultural Stablization and Conservation Service (FSA) pertaining to foreign investment in United States agricultural land. The information collected will be utilized in the preparation of periodic reports to Congress and the President by the Economic Research Service (ERS) concerning the effect of such holdings upon family farms and rural communities.</P> </SECTION> <SECTION> <SECTNO>§ 781.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>In determining the meaning of the provisions of this part, unless the context indicates otherwise, words importing the singular include and apply to several persons or things, words importing the plural include the singular, and words used in the present tense include the future as well as the present. The following terms shall have the following meanings:</P> <P>(a) <E T="03">AFIDA.</E> AFIDA means the Agricultural Foreign Investment Disclosure Act of 1978.</P> <P>(b) <E T="03">Agricultural land.</E> Agricultural land means land in the United States used for forestry production and land in the United States currently used for, or, if currently idle, land last used within the past five years, for farming, ranching, or timber production, except land not exceeding ten acres in the aggregate, if the annual gross receipts from the sale of the farm, ranch, or timber products produced thereon do not exceed $1,000. Farming, ranching, or timber production includes, but is not limited to, activities set forth in the Standard Industrial Classification Manual (1987), Division A, exclusive of industry numbers 0711-0783, 0851, and 0912-0919 which cover animal trapping, <PRTPAGE P="206"/>game management, hunting carried on as a business enterprise, trapping carried on as a business enterprise, and wildlife management. Land used for forestry production means, land exceeding 10 acres in which 10 percent is stocked by trees of any size, including land that formerly had such tree cover and that will be naturally or artificially regenerated.</P> <P>(c) <E T="03">Any interest.</E> Any interest means all interest acquired, transferred or held in agricultural lands by a foreign person, except:</P> <P>(1) Security interests;</P> <P>(2) Leaseholds of less than 10 years;</P> <P>(3) Contingent future interests;</P> <P>(4) Noncontingent future interests which do not become possessory upon the termination of the present possessory estate;</P> <P>(5) Surface or subsurface easements and rights of way used for a purpose unrelated to agricultural production; and</P> <P>(6) An interest solely in mineral rights.</P> <P>(d) <E T="03">County.</E> County means a political subdivision of a State identified as a County or parish. In Alaska, the term means an area so designated by the State Agricultural Stabilization and Conservation committee.</P> <P>(e) <E T="03">Foreign government.</E> Foreign government means any government other than the United States government, the government of a State, or a political subdivision of a State.</P> <P>(f) <E T="03">Foreign individual.</E> Foreign individual means foreign person as defined in paragraph (g)(1) of this section.</P> <P>(g) <E T="03">Foreign person.</E> Foreign person means:</P> <P>(1) Any individual:</P> <P>(i) Who is not a citizen or national of the United States; or</P> <P>(ii) Who is not a citizen of the Northern Mariana Islands or the Trust Territory of the Pacific Islands; or</P> <P>(iii) Who is not lawfully admitted to the United States for permanent residence or paroled into the United States under the Immigration and Nationality Act;</P> <P>(2) Any person, other than an individual or a government, which is created or organized under the laws of a foreign government or which has its principal place of business located outside of all the States;</P> <P>(3) Any foreign government;</P> <P>(4) Any person, other than an individual or a government:</P> <P>(i) Which is created or organized under the laws of any State; and</P> <P>(ii) In which a significant interest or substantial control is directly or indirectly held:</P> <P>(A) By any individual referred to in paragraph (g)(1) of this section; or</P> <P>(B) By any person referred to in paragraph (g)(2) of this section; or</P> <P>(C) By any foreign government referred to in paragraph (g)(3) of this section; or</P> <P>(D) By any numerical combination of such individuals, persons, or governments, which combination need not have a common objective.</P> <P>(h) <E T="03">Person.</E> Person means any individual, corporation, company, association, partnership, society, joint stock company, trust, estate, or any other legal entity.</P> <P>(i) <E T="03">Secretary.</E> Secretary means the Secretary of Agriculture.</P> <P>(j) <E T="03">Security interest.</E> Security interest means a mortgage or other debt securing instrument.</P> <P>(k) <E T="03">Significant interest of substantial control.</E> Significant interest or substantial control means:</P> <P>(1) An interest of 10 percent or more held by a person referred to in paragraph (g)(4) of this section, by a single individual referred to in paragraph (g)(1) of this section, by a single person referred to in paragraph (g)(2) of this section, by a single government referred to in paragraph (g)(3) of this section; or</P> <P>(2) An interest of 10 percent or more held by persons referred to in paragraph (g)(4) of this section, by individuals referred to in paragraph (g)(1) of this section, by persons referred to in paragraph (g)(2) of this section, or by governments referred to in paragraph (g)(3) of this section, whenever such persons, individuals, or governments are acting in concert with respect to such interest even though no single individual, person, or government holds an interest of 10 percent or more; or<PRTPAGE P="207"/> </P> <P>(3) An interest of 50 percent or more, in the aggregate, held by persons referred to in paragraph (g)(4) of this section, by individuals referred to in paragraph (g)(1) of this section, by persons referred to in paragraph (g)(2) of this section, or by governments referred to in paragraph (g)(3) of this section, even though such individuals, persons, or governments may not be acting in concert.</P> <P>(l) <E T="03">State.</E> State means any of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands or any other territory or possession of the United States.</P> <CITA>[49 FR 35074, Sept. 6, 1984, as amended at 58 FR 48274, Sept. 15, 1993]</CITA> </SECTION> <SECTION> <SECTNO>§ 781.3</SECTNO> <SUBJECT>Reporting requirements.</SUBJECT> <P>(a) All reports required to be filed pursuant to this part shall be filed with the FSA County office in the county where the land with respect to which such report must be filed is located or where the FSA County office administering programs carried out on such land is located; Provided, that the FSA office in Washington, DC, may grant permission to foreign persons to file reports directly with its Washington office when complex filings are involved, such as where the land being reported is located in more than one county.</P> <P>(b) Any foreign person who held, holds, acquires, or transfers any interest in United States agricultural land is subject to the requirement of filing a report on form FSA-153 by the following dates:</P> <P>(1) August 1, 1979, if the interest in the agricultural land was held on the day before February 2, 1979, or</P> <P>(2) Ninety days after the date of acquisition or transfer of the interest in the agricultural land, if the interest was acquired or transferred on or after February 2, 1979.</P> <P>(c) Any person who holds or acquires any interest in United States agricultural land at a time when such person is not a foreign person and who subsequently becomes a foreign person must submit, not later than 90 days after the date on which such person becomes a foreign person, a report containing the information required to be submitted under paragraph (e) of this section.</P> <P>(d) Any foreign person who holds or acquires any interest in United States land at a time when such land is not agricultural land and such land subsequently becomes agricultural land must submit, not later than 90 days after the date on which such land becomes agricultural, a report containing the information required to be submitted under paragraph (e) of this section.</P> <P>(e) Any foreign person required to submit a report under this regulation, except under paragraph (g) of this section, shall file an FSA-153 report containing the following information:</P> <P>(1) The legal name and the address of such foreign person;</P> <P>(2) In any case in which such foreign person is an individual, the citizenship of such foreign person;</P> <P>(3) In any case in which such foreign person is not an individual or a government, the nature and name of the person holding the interest, the country in which such foreign person is created or organized, and the principal place of business of such foreign person;</P> <P>(4) The type of interest held by a foreign person who acquired or transferred an interest in agricultural land;</P> <P>(5) The legal description and acreage of such agricultural land;</P> <P>(6) The purchase price paid for, or any other consideration given for, such interest; the amount of the purchase price or the value of the consideration yet to be given; the current estimated value of the land reported;</P> <P>(7) In any case in which such foreign person transfers such interest, the legal name and the address of the person to whom such interest is transferred; and</P> <P>(i) In any case in which such transferee is an individual, the citizenship of such transferee; and</P> <P>(ii) In any case in which such transferee is not an individual, or a government, the nature of the person holding the interest, the country in which such transferee is created or organized, and the principal place of business;</P> <P>(8) The agricultural purposes for which such foreign person intends, on the date on which such report is submitted, to use such agricultural land;<PRTPAGE P="208"/> </P> <P>(9) When applicable, the name, address and relationship of the representative of the foreign person who is completing the FSA-153 form for the foreign person;</P> <P>(10) How the tract of land was acquired or transferred, the relationship of the foreign person to the previous owner, producer, manager, tenant or sharecropper, and the rental agreement; and</P> <P>(11) The date the interest in the land was acquired or transferred.</P> <P>(f)(1) Any foreign person, other than an individual or government, required to submit a report under paragraphs (b), (c), and (d) of this section, must submit, in addition to the report required under paragraph (e) of this section, a report containing the following information:</P> <P>(i) The legal name and the address of each foreign individual or government holding significant interest or substantial control in such foreign person;</P> <P>(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and</P> <P>(iii) In any case in which the holder of significant interest or substantial control in such foreign person is not an individual or a government, the nature and name of the foreign person holding such interest, the country in which such holder is created or organized, and the principal place of business of such holder.</P> <P>(2) In addition, any such foreign person required to submit a report under paragraph (f)(1) of this section may also be required, upon request, to submit a report containing:</P> <P>(i) The legal name and the address of each individual or government whose legal name and address did not appear on the report required to be submitted under paragraph (f)(1) of this section, if such individual or government holds any interest in such foreign person:</P> <P>(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and</P> <P>(iii) In any case in which the holder of such interest is not an individual or a government, the nature and name of the person holding the interest, the country in which such holder is created or organized, and the principal place of business of such holder.</P> <P>(g) Any foreign person, other than an individual or a government, whose legal name is contained on any report submitted in satisfaction of paragraph (f) of this section may also be required, upon request, to:</P> <P>(1) Submit a report containing:</P> <P>(i) The legal name and the address of each foreign individual or government holding significant interest or substantial control in such foreign person;</P> <P>(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and</P> <P>(iii) In any case in which the holder of such interest in such foreign person is not an individual or a government, the nature and name of the foreign person holding such interest, the country in which each holder is created or organized, and the principal place of business of such holder.</P> <P>(2) Submit a report containing:</P> <P>(i) The legal name and address of each individual or government whose legal name and address did not appear on the report required to be submitted under paragraph (g)(1) of this section if such individual or government holds any interest in such foreign person and, except in the case of a request which involves a foreign person, a report was required to be submitted pursuant to paragraph (f)(2) of this section, disclosing information relating to nonforeign interest holders;</P> <P>(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and</P> <P>(iii) In any case in which the holder of such interest is not an individual or government and, except in a situation where the information is requested from a foreign person, a report was required to be submitted pursuant to paragraph (f)(2) of this section disclosing information relating to nonforeign interest holders, the nature and name of the person holding the interest, the country in which such holder is created or organized, and the principal place of business of such holder.</P> <P>(h)(1) Any person which has issued fewer than 100,000 shares of common and preferred stock and instruments convertible into equivalents thereof shall be considered to have satisfactorily determined that it has no obligation to file a report pursuant to § 781.3 <PRTPAGE P="209"/>if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that persons with foreign mailing addresses hold significant interest or substantial control in such person.</P> <P>(2) Any person which has issued 100,000 or more shares of common and preferred stock and instruments convertible into equivalents thereof shall be considerd to have satisfactorily determined that it has no obligation to file a report pursuant to § 781.3 if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that the percentage of shares held in such person both by persons with foreign mailing addresses and investment institutions which manage shares does not equal or exceed significant interest or substantial control in such person.</P> <P>(3) If the person in paragraph (h)(2) of this section determines that the percentage of shares, which is held in it both by persons with foreign mailing addresses and investment institutions which manage shares, equals or exceeds significant interest or substantial control in such persons, then such person shall be considered to have satisfactorily attempted to determine whether it has an obligation to file a report pursuant to § 781.3 if it sends questionnaires to each such investment institution holding an interest in it inquiring as to whether the persons for which they are investing are foreign persons and the percentage of shares reflected by the affirmative responses from each such investment institution plus the percentage of shares held by persons listed on the business records with foreign mailing addresses does not reveal that foreign persons hold significant interest or substantial control in such person.</P> <P>(i) Any foreign person, who submitted a report under paragraph (b), (c), or (d) of this section at a time when such land was agricultural, and such agricultural land later ceases to be agricultural, must submit, not later than 90 days after the date on which such land ceases being agricultural, a revised report from FSA-153 or a written notification of the change of status of the land to the FSA office where the report form was originally filed. The report form and notification must contain the following information:</P> <P>(1) The legal name and the address of such foreign person;</P> <P>(2) The legal description, which includes the State and county where the land is located, and the acreage of such land;</P> <P>(3) The date the land ceases to be agricultural;</P> <P>(4) The use of the land while agricultural.</P> <P>(j) If any foreign person who submitted a report under paragraph (b), (c), or (d) of this section ceases to be a foreign person, such person must submit, not later than 90 days after the date such person ceases being a foreign person, a written notification of the change of status of the person to the FSA office where the report form FSA-153 was originally filed. The notification must contain the following information:</P> <P>(1) The legal name of such person;</P> <P>(2) The legal description and acreage of such land;</P> <P>(3) The date such person ceases to be foreign.</P> <P>(k) Any foreign person who submitted a report under paragraph (b), (c), or (d) of this section must submit, not later than 90 days after the change of information contained on the report, a written notification of the change to the FSA office where the report form FSA-153 was originally filed. The following information must be kept current on the report:</P> <P>(1) The legal address of such foreign person;</P> <P>(2) The legal name and the address required to be submitted under (f)(1) of this section;</P> <P>(3) The legal name and the address required to be submitted under (g)(1) of this section.</P> <CITA>[49 FR 35074, Sept. 6, 1984, as amended at 51 FR 25993, July 18, 1986]</CITA> </SECTION> <SECTION> <SECTNO>§ 781.4</SECTNO> <SUBJECT>Assessment of penalties.</SUBJECT> <P>(a) Violation of the reporting obligations will consist of:</P> <P>(1) Failure to submit any report in accordance with § 781.3;</P> <P>(2) Failure to maintain any submitted report with accurate information; or<PRTPAGE P="210"/> </P> <P>(3) Submission of a report which the foreign person knows:</P> <P>(i) Does not contain, initially or within thirty days from the date of a letter returning for completion such incomplete report, all the information required to be in such report; or</P> <P>(ii) Contains misleading or false information.</P> <P>(b) Any foreign person who violates the reporting obligation as described in paragraph (a) of this section shall be subject to the following penalties:</P> <P>(1) Late-filed reports: One-tenth of one percent of the fair market value, as determined by the Farm Service Agency, of the foreign person's interest in the agricultural land, with respect to which such violation occurred, for each week or portion thereof that such violation continues, but the total penalty imposed shall not exceed 25 percent of the fair market value of the foreign person's interest in such land.</P> <P>(2) Submission of an incomplete report or a report containing misleading or false information, failure to submit a report or failure to maintain a submitted report with accurate information: 25 percent of the fair market value, as determined by the Farm Service Agency, of the foreign person's interest in the agricultural land with respect to which such violation occurred.</P> <P>(3) Penalties prescribed above are subject to downward adjustments based on factors including:</P> <P>(i) Total time the violation existed.</P> <P>(ii) Method of discovery of the violation.</P> <P>(iii) Extenuating circumstances concerning the violation.</P> <P>(iv) Nature of the information misstated or not reported.</P> <P>(c) The fair market value for the land, with respect to which such violation occurred, shall be such value on the date the penalty is assessed, or if the land is no longer agricultural, on the date it was last used as agricultural land. The price or current estimated value reported by the foreign person, as verified and/or adjusted by the County Agricultural Stabilization and Conservation Committee for the County where the land is located, will be considered to be the fair market value.</P> </SECTION> <SECTION> <SECTNO>§ 781.5</SECTNO> <SUBJECT>Penalty review procedure.</SUBJECT> <P>(a) Whenever it appears that a foreign person has violated the reporting obligation as described in paragraph (a) of § 781.4, a written notice of apparent liability will be sent to the foreign person's last known address by the Farm Service Agency. This notice will set forth the facts which indicate apparent liability, identify the type of violation listed in paragraph (a) of § 781.4 which is involved, state the amount of the penalty to be imposed, include a statement of fair market value of the foreign person's interest in the subject land, and summarize the courses of action available to the foreign person.</P> <P>(b) The foreign person involved shall respond to a notice of apparent liability within 60 days after the notice is mailed. If a foreign person fails to respond to the notice of apparent liability, the proposed penalty shall become final. Any of the following actions by the foreign person shall constitute a response meeting the requirements of this paragraph.</P> <P>(1) Payment of the proposed penalty in the amount specified in the notice of apparent liability and filing of a report, if required, in compliance with § 781.3. The amount shall be paid by check or money order drawn to the Treasurer of the United States and shall be mailed to the U.S. Department of Agriculture, P.O. Box 2415, Washington, DC 20013. The Department is not responsible for the loss of currency sent through the mails.</P> <P>(2) Submission of a written statement denying liability for the penalty in whole or in part. Allegations made in any such statement must be supported by detailed factual data. The statement should be mailed to the Administrator, Farm Service Agency, U.S. Department of Agriculture, P.O. Box 2415, Washington, DC 20013.</P> <P>(3) A request for a hearing on the proposed penalty may be filed in accordance with part 780 of this title.</P> <P>(c) After a final decision is issued pursuant to an appeal under part 780 of this title, the Administrator or Administrator's designee shall mail the foreign person a notice of the determination on appeal, stating whether a report must be filed or amended in compliance with § 781.3, the amount of the <PRTPAGE P="211"/>penalty (if any), and the date by which it must be paid. The foreign person shall file or amend the report as required by the Administrator. The penalty in the amount stated shall be paid by check or money order drawn to the Treasurer of the United States and shall be mailed to the United States Department of Agriculture, P.O. Box 2415, Washington, DC 20013. The Department is not responsible for the loss of currency sent through the mails.</P> <P>(d) If the foreign person contests the notice of apparent liability by submitting a written statement or a request for a hearing thereon, the foreign person may elect either to pay the penalty or decline to pay the penalty pending resolution of the matter by the Administrator. If the Administrator determines that the foreign person is not liable for the penalty or is liable for less than the amount paid, the payment will be wholly or proportionally refunded. If the Administrator ultimately determines that the foreign person is liable, the penalty finally imposed shall not exceed the amount imposed in the notice of apparent liability.</P> <P>(e) If a foreign person fails to respond to the notice of apparent liability as required by paragraph (b) of this section, or fails to pay the penalty imposed by the Administrator under paragraph (d) of this section, the case will, without further notice, be referred by the Department to the Department of Justice for prosecution in the appropriate District Court to recover the amount of the penalty.</P> <P>(f) Any amounts approved by the U.S. Department of Agriculture for disbursement to a foreign person under the programs administered by the Department may be setoff against penalties assessed hereunder against such person, in accordance with the provisions of 7 CFR part 13.</P> <CITA>[49 FR 35074, Sept. 6, 1984, as amended at 60 FR 67318, Dec. 29, 1995]</CITA> </SECTION> <SECTION> <SECTNO>§ 781.6</SECTNO> <SUBJECT>Paperwork Reduction Act assigned number.</SUBJECT> <P>The information collection requirements contained in these regulations (7 CFR part 781) have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control number 0560-0097.</P> </SECTION> </PART> <PART> <EAR>Pt. 782</EAR> <HD SOURCE="HED">PART 782—END-USE CERTIFICATE PROGRAM</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECHD>Sec.</SECHD> <SECTNO>782.1</SECTNO> <SUBJECT>Basis and purpose.</SUBJECT> <SECTNO>782.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>782.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>782.4</SECTNO> <SUBJECT>OMB control numbers assigned pursuant to the Paperwork Reduction Act.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Implementation of the End-Use Certificate Program</HD> <SECTNO>782.10</SECTNO> <SUBJECT>Identification of commodities subject to end-use certificate regulations.</SUBJECT> <SECTNO>782.11</SECTNO> <SUBJECT>Extent to which commodities are subject to end-use certificate regulations.</SUBJECT> <SECTNO>782.12</SECTNO> <SUBJECT>Filing FSA-750, End-Use Certificate for Wheat.</SUBJECT> <SECTNO>782.13</SECTNO> <SUBJECT>Importer responsibilities.</SUBJECT> <SECTNO>782.14</SECTNO> <SUBJECT>Identity preservation.</SUBJECT> <SECTNO>782.15</SECTNO> <SUBJECT>Filing FSA-751, Wheat Consumption and Resale Report.</SUBJECT> <SECTNO>782.16</SECTNO> <SUBJECT>Designating end use on form FSA-751.</SUBJECT> <SECTNO>782.17</SECTNO> <SUBJECT>Wheat purchased for resale.</SUBJECT> <SECTNO>782.18</SECTNO> <SUBJECT>Wheat purchased for export.</SUBJECT> <SECTNO>782.19</SECTNO> <SUBJECT>Penalty for noncompliance.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Records and Reports</HD> <SECTNO>782.20</SECTNO> <SUBJECT>Importer records and reports.</SUBJECT> <SECTNO>782.21</SECTNO> <SUBJECT>End-user and exporter records and reports.</SUBJECT> <SECTNO>782.22</SECTNO> <SUBJECT>Subsequent buyer records and reports.</SUBJECT> <SECTNO>782.23</SECTNO> <SUBJECT>Failure to file end-use certificates or consumption and resale reports.</SUBJECT> <SECTNO>782.24</SECTNO> <SUBJECT>Recordkeeping and examination of records.</SUBJECT> <SECTNO>782.25</SECTNO> <SUBJECT>Length of time records are to be kept.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>19 U.S.C. 3391(f).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>60 FR 5089, Jan. 26, 1995, unless otherwise noted.</P> </SOURCE> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>Nomenclature changes to part 782 appear at 61 FR 32643, June 25, 1996.</P> </EDNOTE> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECTION> <SECTNO>§ 782.1</SECTNO> <SUBJECT>Basis and purpose.</SUBJECT> <P>The regulations contained in this part are issued pursuant to and in accordance with Section 321(f) of the North American Free Trade Agreement Implementation Act. These regulations govern the establishment of the end-use certificate program, the completion of end-use certificates, the identification of commodities requiring end-<PRTPAGE P="212"/>use certificates, the submission of reports, and the keeping of records and making of reports incident thereto.</P> </SECTION> <SECTION> <SECTNO>§ 782.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part and in all instructions, forms, and documents in connection therewith, the words and phrases defined in this section shall have the meanings herein assigned to them unless the context or subject matter requires otherwise. References contained herein to other parts of this chapter or title shall be construed as references to such parts and amendments now in effect or later issued.</P> <P> <E T="03">Date of entry</E> means the effective time of entry of the merchandise, as defined in 19 CFR part 101.</P> <P> <E T="03">End Use</E> means the actual manner in which Canadian-produced wheat was used, including, among other uses, milling, brewing, malting, distilling, manufacturing, or export.</P> <P> <E T="03">End user</E> means the entity that uses Canadian-produced wheat for, among other uses, milling, brewing, malting, distilling, manufacturing, or other use, except resale.</P> <P> <E T="03">Entity</E> means a legal entity including, but not limited to, an individual, joint stock company, corporation, association, partnership, cooperative, trust, and estate.</P> <P> <E T="03">Entry</E> means that documentation required by 19 CFR part 142 to be filed with the appropriate U.S. Customs officer to secure the release of imported merchandise from U.S. Customs custody, or the act of filing that documentation.</P> <P> <E T="03">Grain handler</E> means an entity other than the importer, exporter, subsequent buyer, or end user that handles wheat on behalf of an importer, exporter, subsequent buyer, or end user.</P> <P> <E T="03">Importer</E> means a party qualifying as an Importer of Record pursuant to 19 U.S.C. 1484(a).</P> <P> <E T="03">Metric ton</E> means a unit of measure that equals 2,204.6 pounds.</P> <P> <E T="03">Subsequent buyer</E> means an entity other than the end user or importer which owns wheat originating in Canada.</P> <P> <E T="03">Workdays</E> means days that the Federal government normally conducts business, which excludes Saturdays, Sundays, and Federal holidays.</P> <CITA>[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996; 64 FR 12885, Mar. 16, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 782.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>The end-use certificate program will be administered under the general supervision and direction of the Administrator, Farm Service Agency (FSA), U.S. Department of Agriculture (USDA), through the Office of the Deputy Administrator for Commodity Operations (DACO), FSA, Washington, D.C., and the Kansas City Commodity Office (KCCO), FSA, Kansas City, MO, in coordination with the Commissioner of Customs pursuant to a Memorandum of Understanding.</P> </SECTION> <SECTION> <SECTNO>§ 782.4</SECTNO> <SUBJECT>OMB control numbers assigned pursuant to the Paperwork Reduction Act.</SUBJECT> <P>The information collection requirements in this part have been approved by the Office of Management and Budget and assigned OMB control number 0560-0151.</P> <CITA>[61 FR 32643, June 25, 1996]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Implementation of the End-Use Certificate Program</HD> <SECTION> <SECTNO>§ 782.10</SECTNO> <SUBJECT>Identification of commodities subject to end-use certificate regulations.</SUBJECT> <P>(a) The regulations in this part are applicable to wheat and barley, respectively, imported into the U.S. from any foreign country, as defined in 19 CFR 134.1, or instrumentality of such foreign country that, as of April 8, 1994, required end-use certificates for imports of U.S.-produced wheat or barley.</P> <P>(b) Because Canada is the only country with such requirements on wheat, and no country has an end-use certificate requirement for barley, only wheat originating in Canada is affected by the regulations in this part.</P> </SECTION> <SECTION> <SECTNO>§ 782.11</SECTNO> <SUBJECT>Extent to which commodities are subject to end-use certificate regulations.</SUBJECT> <P>(a) In the event that Canada eliminates the requirement for end-use certificates on imports from the U.S., the <PRTPAGE P="213"/>provisions of the regulations in this part shall be suspended 30 calendar days following the date Canada eliminates its end-use certificate requirement, as determined by the Secretary.</P> <P>(b) The provisions of the regulations in this part may be suspended if the Secretary, after consulting with domestic producers, determines that the program has directly resulted in the:</P> <P>(1) Reduction of income to U.S. producers of agricultural commodities, or</P> <P>(2) Reduction of the competitiveness of U.S. agricultural commodities in world export markets.</P> </SECTION> <SECTION> <SECTNO>§ 782.12</SECTNO> <SUBJECT>Filing FSA-750, End-Use Certificate for Wheat.</SUBJECT> <P>(a) Each entity that imports wheat originating in Canada shall, for each entry into the U.S., obtain form FSA-750, End-Use Certificate for Wheat, from Kansas City Commodity Office, Warehouse Contract Division, P.O. Box 419205, Kansas City, MO 64141-6205, and submit the completed original form FSA-750 to KCCO within 10 workdays following the date of entry or release. Each form FSA-750 shall set forth, among other things, the:</P> <P>(1) Name, address, and telephone number of the importer,</P> <P>(2) Customs entry number,</P> <P>(3) Date of entry,</P> <P>(4) Importer number,</P> <P>(5) Class of wheat being imported,</P> <P>(6) Grade, protein content, moisture content, and dockage level of wheat being imported,</P> <P>(7) If imported as a result of a contract for sale, the date of such contract.</P> <P>(8) Quantity imported, in net metric tons, rounded to the nearest hundredth of a metric ton, per conveyance,</P> <P>(9) Storage location of the wheat,</P> <P>(10) Mode of transportation and the name of the transportation company used to import the wheat, and</P> <P>(11) A certification that the identity of the Canadian-produced wheat will be preserved until such time as the wheat is either delivered to a subsequent buyer or end-user, or loaded onto a conveyance for direct delivery to an end user.</P> <P>(b) Importers may provide computer generated form FSA-750, provided such computer generated forms:</P> <P>(1) Are approved in advance by KCCO,</P> <P>(2) Contain a KCCO-assigned serial number, and</P> <P>(3) Contain all of the information required in paragraphs (a)(1) through (a)(9).</P> <P>(c) KCCO will accept form FSA-750 submitted through the following methods:</P> <P>(1) Mail service, including express mail,</P> <P>(2) Facsimile machine, and</P> <P>(3) Other electronic transmissions, provided such transmissions are approved in advance by KCCO. The importer remains responsible for ensuring that electronically transmitted forms are received in accordance with paragraph (a).</P> <P>(d) The original form FSA-750 and one copy of form FSA-750 shall be signed and dated by the importer.</P> <P>(e) Distribution of form FSA-750 will be as follows:</P> <P>(1) If form FSA-750 is submitted to KCCO in accordance with paragraph (c)(1);</P> <P>(i) The original shall be forwarded to Kansas City Commodity Office, Warehouse License and Contract Division, P.O. Box 419205, Kansas City, MO 64141-6205, by the importer,</P> <P>(ii) One copy shall be retained by the importer.</P> <P>(2) If form FSA-750 is submitted to KCCO in accordance with paragraphs (c)(2) or (c)(3), the original form FSA-750 that is signed and dated by the importer in accordance with paragraph (d) shall be maintained by the importer,</P> <P>(3) The importer shall provide a photocopy to the end user or, if the wheat is purchased for purposes of resale, the subsequent buyer(s).</P> <P>(f) The completion and filing of an end-use certificate does not relieve the importer of other legal requirements, such as those imposed by other U.S. agencies, pertaining to the importation.</P> <CITA>[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996; 64 FR 12885, Mar. 16, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 782.13</SECTNO> <SUBJECT>Importer responsibilities.</SUBJECT> <P>The importer shall:</P> <P>(a) File form FSA-750 in accordance with § 782.12.<PRTPAGE P="214"/> </P> <P>(b) Immediately notify each subsequent buyer, grain handler, or end user that the wheat being purchased or handled originated in Canada and may only be commingled with U.S.-produced wheat by the end user or when loaded onto a conveyance for direct delivery to the end user or a foreign country.</P> <P>(c) Provide each subsequent buyer or end user with a copy of form FSA-750 that was filed when the Canadian wheat entered the U.S.</P> <P>(d) Submit to KCCO, within 15 workdays following the date of sale, form FSA-751, Wheat Consumption and Resale Report, in accordance with § 782.15.</P> <CITA>[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996]</CITA> </SECTION> <SECTION> <SECTNO>§ 782.14</SECTNO> <SUBJECT>Identity preservation.</SUBJECT> <P>(a) The importer and all subsequent buyers of the imported wheat shall preserve the identity of the Canadian-produced wheat.</P> <P>(b) Canadian-produced wheat may only be commingled with U.S.-produced wheat by the end user, or when loaded onto a conveyance for direct delivery to the end user or foreign country.</P> <P>(c) Failure to meet the requirements in paragraphs (a) and (b) of this section shall constitute noncompliance by the importer or subsequent buyer for the purposes of this part.</P> </SECTION> <SECTION> <SECTNO>§ 782.15</SECTNO> <SUBJECT>Filing FSA-751, Wheat Consumption and Resale Report.</SUBJECT> <P>(a) For purposes of providing information relating to the consumption and resale of Canadian-produced wheat, form FSA-751, Wheat Consumption and Resale Report, shall be filed with KCCO by each:</P> <P>(1) Importer and subsequent buyer, for each sale to a subsequent buyer or end user, within 15 workdays following the date of sale.</P> <P>(2) End user and exporter, for full and partial consumption or export, within 15 workdays following:</P> <P>(i) March 31,</P> <P>(ii) June 30,</P> <P>(iii) September 30, and</P> <P>(iv) December 31.</P> <P>(b) Each form FSA-751 shall set forth, among other things, the:</P> <P>(1) Name, address, and telephone number of the filer,</P> <P>(2) Storage location of the wheat,</P> <P>(3) Name and address of the importer,</P> <P>(4) Form FSA-750, End-Use Certificate for Wheat, serial number,</P> <P>(5) Class of wheat,</P> <P>(6) Date the wheat was received at the filer's facility,</P> <P>(7) Quantity of wheat received, in net metric tons, rounded to the nearest hundredth of a metric ton,</P> <P>(8) Certification to be completed by end users and exporters that requires the end user or exporter to provide, among other things:</P> <P>(i) A certification of compliance with these regulations,</P> <P>(ii) The quantity consumed or exported,</P> <P>(iii) The quantity remaining,</P> <P>(iv) The manner in which the commodity was used.</P> <P>(v) The signature of an authorized representative of the end user or exporter.</P> <P>(9) Certification to be completed by subsequent buyers and importers that requires the subsequent buyer or importer to provide, among other things:</P> <P>(i) A certification of compliance with the regulations in this part,</P> <P>(ii) The quantity resold,</P> <P>(iii) The name,